Do energy prices converge across Russian regions?

This paper tests for price convergence in Russian energy markets from January 2003 to October 2010. Monthly energy prices for four energy products (diesel, gasoline, electricity and coal) for 83 Russian regions are drawn from Russia's statistical agency Rosstat. The study contributes to the existing literature by using the Exponential Smooth Auto-Regressive Augmented Dickey–Fuller unit root test in a panel setup, which encompasses cross-section dependence. We find that there are no fully integrated national energy markets in Russia, possibly due to the peripheral position of diverging regions, unbalanced distribution of energy reserves and limited cross-border transmission capacity.     

Do Balkan economies catch up with EU? New evidence from panel unit root analysis

This paper explores empirically the issue of income convergence for the Balkans over the period 1994–2011 and the investigation relies on income differentials from both the averages of the European Union’s-15 (EU-15) and the European Union’s-24 (EU-24) as well as within the Balkan group. The adopted methodology deploys the non stationary panel unit root framework to cope with the problem of limited sample providing more reliable insight and, in particular, the analysis uses the univariate and panel minimum Lagrange Multiplier (LM) unit root tests, suggested by Lee and Strazicich (2003, 2004) and Im et al. (2005), that accounts for one and two endogenously determined structural breaks. The overall evidence is in favor of catching up with the EU benchmark cases as well as in favor of convergence within the Balkan area. However, disparities for some countries are confirmed.     

Do per capita health care expenditures converge among OECD countries? Evidence from unit root tests with level and trend-shifts

This study examines the stochastic conditional convergence of per capita health care expenditures (PCHCE) among 19 OECD countries over the period 1972–2008. Specifically, newly developed LM and RALS-LM unit root tests with allowance for two endogenously determined structural breaks are employed. The results indicate support for PCHCE convergence among most OECD countries. The results are stronger in more general tests that control for two breaks and nonnormal errors. Panel unit root tests provide additional support for the stochastic convergence of PCHCE.     

Do corporate executives have accurate predictions for the economy? A directional analysis

Although many studies on the directional accuracy of forecasts by international organizations and professional forecasters have been scrutinized, little attention has been paid to forecasts by business leaders. In order to address this gap, we use directional tests to investigate whether forecasts of Gross Domestic Product by corporate executives are valuable to their users. Our findings indicate that all the forecasts with forecast horizons from 1 to 14 months are valuable, whereas established literature indicates that longer-term forecasts tend not to be valuable. This suggests that corporate executives are concerned with and focus on longer-term economic environments and can therefore serve as an important resource for policymakers. However, some of the useful forecasts with real-time data, in particular those in the Tankan survey, are not useful with historical data.     

Do hours worked contain a unit root? Evidence from panel data

The aim of the present paper is to provide cross country evidence of the non-stationarity of hours worked for OECD countries. For this purpose, panel unit root tests are employed to improve power against univariate counterparts. Since cross section correlation is a distinct feature of the underlying panel data, results are based on various second generation panel unit root tests, which account for cross section dependence among units. If an unobserved common factor model is assumed for generating the observations, there is indication for both a common factor and idiosyncratic components driving the non-stationarity of hours worked. In addition, taking these results together, there is no indication of cointegration among the individual time series of hours worked.     

Does GNP have a unit root?: A re-evaluation

Stock and Watson (1986) test the hypothesis that real per capita GNP has a unit root by using a test statistic due to Phillips (1985) which incorporates a non-parametric correction for the serial correlation induced by system and error dynamics. The version of this test that is used by Stock and Watson does not accomodate the presence of a drift, and to compensate, they detrend the series by extracting a 1.5% annual trend growth. We use a version of this class of non-parametric tests, developed by Phillips and Perron (1986), which allows for an estimated drift, and reassess the Stock and Watson findings.     

Do fiscal decentralization and income inequality affect the size of the shadow economy? A panel data analysis for OECD countries

In this article, we study fiscal decentralization and inequality as driving forces of the shadow economy in advanced economies. Our empirical analysis suggests that a reduction in income inequality will contain the shadow economy, whereas expenditure and tax decentralization do not significantly impact it. As decentralization is generally believed to increase government efficiency, this result is indicative of already highly efficient public administrations. Our results further indicate that redistributive policies positively affect the size of the shadow economy, whereas the tax burden does not have any discernible effect on the shadow economy in our sample.     

Leaving the market or reducing the coverage? A model-based experimental analysis of the demand for insurance

This study develops a theoretical, and experimental analysis addressing the issue of premium variations on the demand for insurance. Accounting for risk attitudes, our contribution disentangles the decision to buy insurance from the conditional demand (the non-null demand for insurance). Partially validating our theoretical predictions, our experimental results show that, when it has an effect, a non-massive increase in the premium (either in the unit price or the fixed cost) exclusively results in an exit from the insurance market (the risk lovers first, then the risk averters). Moreover, our study highlights a key feature of risk-seeking agents' behavior; they exhibit behavior consistent with gambling and opportunism rather than a lack of interest in insurance.     

Testing for a unit root under the alternative hypothesis of ARIMA (0, 2, 1)

Showing a dual relationship between ARIMA (0,?2,?1) with parameter θ?=??1 and the random walk, a new alternative hypothesis in the form of ARIMA (0,?2,?1) is established in this article for evaluating unit root tests. The power of four methods of testing for a unit root is investigated under the new alternative, using Monte Carlo simulations. The first method testing θ?=??1 in second differences and using a new set of critical values suggested by the two authors in finite samples, is the most appropriate from the integration order point of view. The other three methods refer to tests based on t and?φ?statistics introduced by Dickey and Fuller, as well as, the nonparametric Phillips–Perron test. Additionally, for cases where for the first method a low power is met, we studied the validity of prediction interval for a future value of ARIMA (0,?2,?1) with θ close but greater of ?1, using the prediction equation and the error variance of the random walk. Keeping the forecasting horizon short, the coverage of the interval ranged at expected levels, but its average half-length ranged up to four times more than its true value.     

What explains Latin America's poor investment performance during the 1980–2001 period?: a panel unit root analysis

This article analyses the theoretical and empirical links between key economic variables and private investment spending in Latin America during the 1980–2001 period. The Seemingly Unrelated Regression (SUR) estimates for the pooled investment model suggest that real (lagged) public investment, the output gap, lagged domestic credit to the private sector, and the national savings rate have a positive and significant effect on private capital formation, while the standard deviation of the real exchange rate index has a negative effect on private capital formation. A major contribution of the study is the application of recently developed panel unit roots test on the stacked residuals of the pooled regressions. The tests indicate that the included variables have a stable, non‐spurious (cointegrated) relationship. All in all, the findings in this article make an important contribution to the ongoing debate about which policies need to be promoted to raise and sustain the rate of private capital formation – Latin America's future source of employment and income creation.     

Do regional trade agreements stimulate FDI? Evidence for the Agadir,MERCOSUR and AFTA regions

The integration of emerging markets into the global economy is heavily promoted by foreign direct investment (FDI ) inflows. Among the factors explaining the location of FDI , regional trade agreements (RTA s) can be relevant for emerging markets, as they can promote economic integration and increase the attractiveness of the region for foreign investors. This paper investigates the impact of South–South trade agreements on the FDI decision of multinationals, where the Agadir, mercado comun del sur (MERCOSUR), and ASEAN free trade area (AFTA) agreements are considered. Three panels of countries are defined, where the members joined a specific agreement or not. Non‐Gulf Arab states are compared to better performing regions in Latin America and Southern and Eastern Asia. The analysis provides evidence that openness to foreign trade and financial markets are among the main catalysts to attract FDI , provided that business‐friendly institutions exist in the host country. Other variables, like the size of the industrial sector, urbanization rates, and external debt appear to be important in some cases. The integration of China into the world economy is a specific trigger for FDI to Asian destinations. Since RTA s influence the market size by reducing barriers to trade, their impact operates via GDP growth and openness. Gains from the agreement are striking for Latin America and Asia, but not for Arab states. To attract more FDI , business‐friendly institutional reforms and mechanisms to support new firm foundation should be implemented in this region.     

Do the best go west? An analysis of the self-selection of employed East-West migrants in Germany

Since the inequality of earnings in East Germany has approached West German levels in the late 1990s, the standard Roy model predicts that a positive selection bias of East-West migrants should disappear. Using a switching regression model and data from the IAB-employment sample, we find however that employed East-West migrants remain positively self-selected with respect to unobserved abilities. This result is consistent with the predictions of our extended Roy model which considers moving costs that are negatively correlated with labour market abilities of individuals. Moreover, we find that wage differentials as well as differences in employment opportunities are the central forces which drive East-West migration after unification.

Do overweight and obesity prevalence rates converge in Europe?

We exploit recently published data to evaluate the long-run evolution of overweight and obesity rates among European economies between 1975 and 2016. We find that overweight rates for both females and males converge in Europe. In particular, the convergence is driven by the nations in the EU. This fact is consistent with food patterns as well as trade, agricultural, and health policies that are common among EU members. Across our model specifications, the steady-state average overweight rate ranges between 60% and 77% for European female individuals and lies above 82% for their male counterparts. Confidence intervals suggest that such gender differences are statistically significant. In the EU, the point estimates of these rates are 62% and 91%, respectively. Obesity prevalence in Europe would reach long-term rates of 39% and 45% for females and males respectively, whereas these rates would be similar in the EU (approximately 28%).     

Do regional house prices converge or diverge in China?

This paper aims to test whether the regional house prices are convergent or divergent in China using a monthly panel data set of China’s 70 large and medium-sized cities from July 2005 to December 2010. This issue is closely related to understanding the efficiency of the country-level housing policies made by China’s central government. The test results suggest that the regional house prices in China are generally divergent, and thereby the country-level policies may be inefficient since they do not explicitly take the strong heterogeneity of China’s regional housing markets into consideration. As a consequence, it may be better for China’s central government to further decentralize and devolve its governance toward the housing market to the local governments.     

Are the Australian and New Zealand stock prices nonlinear with a unit root?

Whether or not stock prices are characterized by a unit root has important implications for policy. For instance, by applying unit root tests one can deduce whether stock returns can be predicted from previous changes in prices. A finding of a unit root implies that stock returns cannot be predicted. This paper investigates whether or not stock prices for Australia and New Zealand can be characterized by a unit root process. An unrestricted two-regime threshold autoregressive model is used with an autoregressive unit root. Among the main results, it is found that the stock prices of both countries are nonlinear processes that are characterized by a unit root process, consistent with the efficient market hypothesis.     

What determines the value of recommendation change? A preliminary analysis

This article determines the condition under which recommendation changes relative to consensus recommendation and recommendation changes relative to analyst’s previous recommendation are valuable. We show that recommendation upgrades (downgrades) relative to consensus recommendation are followed by significantly positive (negative) short-term returns whenever consensus recommendation represents convergence of analysts’ opinions. We also show that as the standard deviation associated with consensus recommendation increase, the value of recommendation changes reduce significantly. This article also shows that recommendation upgrades (downgrades) relative to analyst’s previous recommendation are followed by significantly positive (negative) short-term returns whenever interval between two consecutive recommendations is relatively short. We also show that, as the interval between two consecutive recommendations increase, the value of recommendation changes reduce significantly. Our results are robust across various subsamples based on size and region.     

Medicare for all or medicare for none? A macroeconomic analysis of healthcare reform

In this study, I develop a novel general equilibrium life cycle model composed of finitely-lived households that differ according to age, skill level, and access to employer-provided health insurance. After introducing a “Medicare for all” health insurance system to the model, I examine how the welfare response to this policy change will differ according to household characteristics. Then, I compare this system to a completely privatized health insurance system that achieves universal health insurance coverage through the creation of utilization-based premium subsidies. In general, both systems tend to improve the welfare of young households at the expense of old households. However, when using average value-of-life as the primary measure of welfare, Medicare for all either benefits unskilled households at the expense of skilled households, or makes both worse off. In contrast, the privatized system improves the average value-of-life of all household groups, regardless of skill level or prior access to employer-provided health insurance.     

Do real interest rates converge across Latin american countries?

In this study, we apply the Sequential Panel Selection Method (SPSM), proposed by Chortareas and Kapetanios (Journal of Banking and Finance 33:390–404, 2009), to investigate and assess the non-stationary properties of the real interest rate parity (RIRP) for fourteen Latin American countries. Utilizing the SPSM, we can classify the entire panel into a group of stationary series and a group of non-stationary series. We clearly identify how many and which series in the panel are stationary processes and provide robust evidence that clearly indicate RIRP holds true for ten countries. Our findings note that these countries’ real interest rate convergence is a mean reversion toward RIRP equilibrium values in a non-linear way. Our results have important policy implications for these Latin American countries under study.     

Does output have a unit root? New international evidence

In this paper unit-root tests for per capita output of 12 OECD countries are performed. Using traditional unit-root tests, it follows that the unit-root hypothesis cannot be rejected except for the US. However, following the approach of Perron (1989), which takes shifts in mean and/or trend into account, the null hypothesis of a unit-root can be rejected in most countries in our sample. In contrast to Perron, a method suggested by Christiano (1992)is used to determine the break date endogenously.