Health spending and public pension: evidence from panel data

This article empirically investigates the determinants of aggregate health expenditure in a panel of OECD countries from 1980 to 2005. We differ from most existing studies by testing some new determinants motivated by recent theoretical advances in the literature. We find that a one percentage increase in public pension payments per elderly person leads to approximately a one third percentage increase in aggregate health spending, and this effect is significant and robust across a variety of model specifications. A back of the envelope calculation based on this estimate suggests that the expansion of the public pension programme on average accounts for approximately over one fifth of the rise in aggregate health expenditure as a share of GDP in the set of OECD countries during 1980–2005. In addition, we find that the estimated effect of GDP per capita in our model ranges from 0.66 to 0.80, which is consistent with the results from some recent studies, and thus further reinforces the finding in the literature that health care is not a luxury good.     

Consumption,habit formation,and savings: Evidence from a rural household panel survey

Protecting consumption from the effects of uninsured risk is vital for rural farming households, who tend to be poor and live close to subsistence level. Income uncertainty and habit formation play important roles in the consumption and savings. Variability in weather conditions has a strong linkage with variability in agricultural income in developing countries. This study analyzes consumption and saving decisions of rural farm households in India. Using household panel data for 4 years, we estimated consumption equation accounting for habit formation under income uncertainty. Our findings suggest an evidence for habit formation among rural households. Additionally, we found that both annual and seasonal weather risks significantly influence savings among rural households. Findings from this study also suggest a robust and vibrant farm economy and that the nonfarm economy could contribute to the economic well‐being of rural farming households.     

Factors affecting trade in services: evidence from panel data

In the course of economic development, nations have typically progressed through stages in which agriculture, then manufacturing and, finally, services predominate. Concerns around the sustainability of manufacturing and goods export-led growth raise the importance of trade in services. In the context of a panel model, controlling for the factors that determine trade in general, we examine the determinants of trade in services in a sample of 46 countries over the decade 2004–2015. We find an ambiguous pattern of effects from institutional quality but strong evidence of the importance of trade in goods for trade in services.     

Broadband penetration and economic growth nexus: evidence from cross-country panel data

This article investigates whether there are Granger causal relationships between broadband penetration, degree of urbanization, foreign direct investment and economic growth using a panel data set covering the G-20 countries for the period 1998–2011. Using our multivariate framework, we first find that all of the variables are cointegrated. Our findings further reveal a network of causal connections between the variables including short-run bidirectional causality between broadband penetration and economic growth among the more developed countries within the G-20. On the other hand, for the developing countries within the G-20, there is evidence of unidirectional causality from economic growth to broadband penetration.     

Employment protection and productivity: evidence from firm-level panel data in Japan

Recent developments in the literature on Employment Protection Legislation (EPL) have revealed that changing the stringency of employment protection can lead to extensive consequences outside the labour market, by affecting firms’ production decisions or workers’ commitment levels. This article provides the first empirical evaluation of the comprehensive effect of restrictions on firing employees in Japan, by exploiting the variations in court decisions. We find that judgements lenient to workers significantly reduce firms’ total-factor productivity growth rate. The effect on capital is mixed and inconclusive, although we obtain modest evidence that an increase in firing costs induces a negative scale effect on capital inputs.     

The Abrams curve of government size and unemployment: evidence from panel data

This study investigates the long run relationship between government size and unemployment rate, the Abrams curve, using ten European countries over the period 1961–1999. To this end, panel cointegration analysis and estimation techniques appropriate for heterogeneous panels are made use of. The results support the idea that there is an Abrams curve, and the relation between government size and the unemployment rate is positive.     

Trade barriers,multinational involvement and intra-industry trade: panel data evidence from India

The article analyses the effects of trade barriers and multinationals on the intensity of intra-industry trade (IIT) in a panel of Indian manufacturing industries from 1988 to 1999. We find that the intensity of IIT increases with the reduction of trade barriers. This is expected as greater competition from imports leads individual plants in the domestic industry to specialize in the manufacturing of unique varieties. The analysis suggests that horizontal (market seeking) multinational activities in the domestic industries exert a negative influence on IIT. This is consistent with the view that horizontal multinationals displace exports to the host country. At the same time, our results indicate that IIT will be stimulated to the extent that the entry of multinationals induces intra-industry specialization. We also analyse the role of product differentiation and plant level scale economies in determining IIT.     

Technological knowledge,spillover and productivity: evidence from Taiwanese firm level panel data

Using a panel data on Taiwanese manufacturing firms from 1990–1997, this study investigates the relationship among technological knowledge, spillover and productivity. In addition to R&D stock, we also employ patent counts to construct the output-side indicators of knowledge and spillover to explore the relationship between knowledge and productivity. We find a very significant contribution of R&D, patents and spillover stock to productivity. In addition, the magnitude of the patent stock coefficient is substantially larger than that estimated by R&D stock. Our results imply that innovative activity investment has been very productive in increasing output for Taiwanese manufacturing firms in the 1990s.     

Regulation, privatization, and airport charges: panel data evidence from European airports

This paper examines the determinants of airport aeronautical charges by employing a unique panel dataset covering sixty-one European airports over an eighteen-year period. We are able to extend the literature on the role of airports as an essential element in transport infrastructure by offering the first analysis of the impact of different regulatory policies and privatization on airport charges in a panel data setting where fixed effects can be employed to mitigate endogeneity concerns. Our main empirical results indicate that aeronautical charges are lower at airports when single-till regulation is employed, when airports are privatized, and??tentatively??when ex post price regulation is applied. Furthermore, hub airports generally set higher aeronautical charges, and it appears that price-cap regulation and the presence of nearby airports do not affect aeronautical charges.     

Returns to scale in a matching model: evidence from disaggregated panel data

The returns to scale in the matching function play an important role in models with endogenous search effort. Due to positive externalities, increasing returns to scale in matching can support high or low activity equilibrium in the labour market. In this study, we examine this issue using panel data from Finnish employment offices. The study finds that the results from the Cobb–Douglas and translog specification are qualitatively different. The CD specification of the matching function exhibits constant returns to scale. The translog specification, in turn, exhibits increasing returns to scale. The elasticity estimate for returns, using the preferred specification and minimum and maximum sample values for job seekers and vacancies, fall in the range of 1.1 to 1.6.     

Saving behaviour: evidence from Portugal

This paper analyses the determinants of saving behaviour among Portuguese households using a structural equation model with latent variables. It is found that the main factors directly influencing households' saving behaviour are their attitude towards saving and their level of income. However, savers' behaviour is also indirectly influenced by their perceptions of longevity, their feelings as savers, the replacement rate and the age. The family size does not have any effect, either directly or indirectly. Policy implications are derived from the study.     

The permanent income hypothesis and the real interest rate: Some evidence from panel data

A test of the permanent income hypothesis in panel data is formulated taking into account both the time-series and cross-section variation in the rate of return. The over-identifying restrictions of the theory rejected.     

Firm size and capital structure: evidence using dynamic panel data

This article suggests that the validity of the Trade-Off Theory (TOT) and Pecking-Order Theory (POT) to explain financing decisions varies among small, medium-sized and large firms. Using dynamic panel data tests on a sample of 3439 Spanish firms over the period 1995–2003, results are partially consistent with both explanations but suggest a greater validity of pecking-order predictions for small firms. In small firms, the negative influence of profitability and the positive influence of investment opportunities and of intangible assets on firm debt predicted by the POT are heightened. However, no differences are observed between small and large firms in their speed of adjustment to the target leverage as suggested by the TOT.     

Convergence in household credit demand across euro area countries: evidence from panel data

This article contributes to the literature on the convergence of financial systems in the euro area by estimating household credit demand in individual countries. Using the ARDL framework advocated notably by Pesaran et al. (1999 Pesaran, MH, Shin, Y and Smith, RP. 1999. Pooled mean group estimation of dynamic heterogeneous panels. Journal of the American Statistical Association, 94: 621–34. [Taylor & Francis Online], [Web of Science ®] , [Google Scholar]), the article provides evidence on the convergence of long-run credit demand determinants (interest rates, investment and house prices) in the largest euro area countries, while short run-dynamics remain heterogenous across countries. The article also demonstrates that the equation uncovers demand rather than supply behaviour.     

Remittances and the Dutch disease: evidence from Georgia

In this article, using the VECM model we attempt to empirically examine the Dutch disease effect of remittances in Georgia. The analyses are based on quarterly data covering the years 2000–2016. It is found that an inflow of remittances leads to an appreciation of the real effective exchange rate in the long run, whereas it has the reverse effect in the short run.     

Foreign direct investment and business cycle co-movements: The panel data evidence

The previous literature has largely overlooked the possible channels through which foreign direct investment (FDI) might influence business cycle synchronization. In this study we analyze the linkages that exist among FDI, trade and industrial dissimilarity in relation to business cycle co-movements using a panel data set taken from 77 pairs of developed countries. The error component three-stage least squares (EC3SLS) estimates from a simultaneous equations model with panel data are shown to be superior to the estimates obtained from single equation models or simultaneous equations models with cross-sectional data. Our results indicate that FDI serves as a channel of international business cycle transmission that is equally important as the channels of trade and monetary policy. On the contrary, industrial dissimilarity is identified as having an indirect impact on the business cycle correlation through trade and FDI. Furthermore, our findings suggest that in our sample FDI is of the horizontal type and tends to substitute for trade.     

On the optimality of public capital for long-run economic growth: evidence from panel data

The role of public capital in economic growth is examined using data from the Penn World Tables and other sources on a large number of countries. Drawing on intertemporal optimization, the theoretical framework nests the exogenous (Solow) and endogenous types of growth and is data-consistent. It is found that public capital makes a significant contribution to growth. The actual level of investment on public capital is suboptimal. Growth in recent decades can be characterized as ‘endogenous’ with little sign of convergence. There is evidence of a growth slow-down between the 1970s and 1980s. Human capital also significantly enhances growth.     

Financial development and openness: Evidence from panel data

This paper addresses the empirical question of whether trade and financial openness can help explain the recent pace in financial development, as well as its variation across countries in recent years. Utilising annual data from developing and industrialised countries and dynamic panel estimation techniques, we provide evidence which suggests that both types of openness are statistically significant determinants of banking sector development. Our findings reveal that the marginal effects of trade (financial) openness are negatively related to the degree of financial (trade) openness, indicating that relatively closed economies stand to benefit most from opening up their trade and/or capital accounts. Although these economies may be able to accomplish more by taking steps to open both their trade and capital accounts, opening up one without the other could still generate gains in terms of banking sector development. Thus, our findings provide only partial support to the well known Rajan and Zingales hypothesis, which stipulates that both types of openness are necessary for financial development to take place.     

The effects of government expenditure on imports in the Eurozone reconsidered: evidence from panel data

This study examines the impact of government expenditure on imports. The empirical analysis is based on annual data of the euro area countries for the period 1995–2015. We employ econometric methods that mitigate heterogeneity and cross-sectional dependence. We provide empirical indications that the components of expenditure have different impact on imports demand. The findings of this study indicate that the import context of government expenditure is lower than the import context of others expenditure components. Finally, we find that an increase in government expenditure leads to an increase in imports; this implies that, ceteris paribus that it can lead to a deterioration of the trade balance.     

Asymmetric output growth effects of government spending: Cross-sectional and panel data evidence

Using a model that accommodates asymmetric adjustments of output growth to changes in growth of government spending, the effects of aggregate and disaggregate government spending variables on output growth are examined. Both cross-section and panel regression estimations are conducted. Robustness of results to joint-endogeneity of output and government spending, alternative conditioning variables, and cointegration is investigated. Aggregate government spending appears to have positive output growth effects particularly in periods of below-trend growth in this variable. The government sector's productivity appears to be higher than non-government sector's productivity when spending growth is below-trend growth and only for non-OECD countries; no differences in sectoral productivities are detected for OECD countries. Government consumption spending has no significant output growth effects, but government investment spending has positive output growth effects particularly when its growth falls below its trend-growth; this favorable effect turns negative when government investment spending growth exceeds its trend-growth. Results are robust across alternative model specifications and estimation methods.