Upstream-downstream transactions and watershed externalities: Experimental evidence from Kenya

Where environmental policies or projects seek behavioral change, understanding underlying norms and preferences is essential to securing environmental outcomes. This study models a payment for environmental services intervention in an experimental field laboratory in Nyanza Province, Kenya. Upstream and downstream individuals are paired in a standard investment game, in which the upstream mover's investment represents land use decisions and the downstream mover responds with a choice of compensation payment. The experimental intervention introduces an enforcement treatment on the downstream movers' compensation decisions for a single round. Underlying social preferences and identity appear to shape individual transactions between upstream and downstream individuals. Upstream first movers are sensitive to the removal of the enforcement on their downstream partners in the second round, and make decisions consistent with crowding out of social preferences. The results suggest that environmental interventions may affect resource decisions for individuals who are not themselves direct targets of enforcement.     

Foreign investments in real estate,economic growth and property prices: evidence from OECD countries

The last two decades have witnessed a growth in foreign direct investments (FDI) in the real estate sector in most of the Organization for Economic Co-Operation and Development (OECD) countries. It is argued that FDI in the real estate sector may improve economic growth in recipient economies. On the other hand, property prices have increased considerably in OECD countries in recent years and some argue that FDI in real estate is one of the driving forces of high property prices in these countries. The purpose of this study is to analyze the interrelationship between FDI in the real estate sector, economic growth, and property prices while controlling for interest rate and inflation. We use observations from a set of OECD countries for the period between 1995 and 2008. The dynamic interrelationship is analyzed by applying a panel cointegration technique. Our empirical results show that FDI in real estate do not cause property price appreciations and also do not contribute to economic growth in OECD countries in the short run and the long run.     

Fiscal policy,rent seeking,and growth under electoral uncertainty: theory and evidence from the OECD

Abstract. We construct a general equilibrium model of economic growth and optimally chosen fiscal policy, in which individuals compete with each other for a share of government spending and two political parties alternate in power according to exogenous electoral uncertainty. The main prediction is that uncertainty about remaining in power results in increased fiscal spending, which in turn distorts incentives by pushing individuals away from productive work to rent‐seeking activities; then, distorted incentives hurt growth. This scenario receives empirical support in a dataset of 25 OECD countries over the period 1982–96. In particular, uncertainty about remaining in power leads to larger government shares in GDP, which in turn exert an adverse effect on the ICRG index measuring incentives and this is bad for growth.     

Globalisation, capital mobility and tax competition: theory and evidence for OECD countries

Are the predictions of tax competition theory wrong? While the tax competition literature predicts that taxes on income from capital decrease with increasing globalisation, past empirical studies on various data find contradicting evidence. By using different data and additional elements of economic theory, this paper aims to challenge the empirical contributions. For a panel of 14 OECD countries and for the period 1967–1996, we find that globalisation has indeed a negative and significant impact on corporate taxes. Furthermore, globalisation tends to raise labour taxes and social expenditures. As a consequence, the so-called “efficiency” and “compensation” hypotheses of globalisation are not competing, but rather, both appear to apply at the same time. Efficiency has an impact on the tax-mix, whereas compensation is provided through increased social expenditures.     

Inflation and real sectoral output shares: Dynamic panel model evidence from seven OECD countries

Models of the cost of inflation often conclude that inflation misallocates resources. For example, inflation may lead to an increase in the variability of relative prices and it is often claimed that this increase in variability leads to a misallocation of resources. This claim raises the following empirical question, does inflation alter the composition of real output; that is, does it change real output shares? We examine this question using dynamic panel data methods for nine sector panels each with seven OECD countries from 1970 to 2005. We find evidence that inflation changes the real shares of some sectors even when inflation is treated as endogenous.     

The causal dynamics between renewable energy,real GDP,emissions and oil prices: evidence from OECD countries

This study extends the empirical literature on the determinants of renewable energy consumption in the case of 25 OECD countries for the period 1980–2011. Preliminary analysis suggests the presence of cross-sectional dependence within the panel data. As a result, second-generation panel unit root tests of Smith et al. (2004) and Pesaran (2007) are undertaken to find the respective variables that are integrated of order one. Panel cointegration and error correction modelling reveal that a long-run relationship exists between renewable energy consumption per capita, real GDP per capita, carbon dioxide emissions per capita and real oil prices. The long-run elasticity estimates are positive and statistically significant for real GDP per capita, carbon dioxide emissions per capita and real oil prices. The panel error correction model shows that a feedback relationship exists among the variables.     

The effects of economic and political integration on fiscal decentralization: evidence from OECD countries

Abstract .  This paper examines the impact of economic and political integration on the vertical government structure. It argues that, by increasing the market size and the benefits of decentralized provision of public goods, integration triggered the recent process of decentralization in OECD countries. A panel analysis relates the degree of fiscal decentralization to economic and European integration, controlling for interregional heterogeneity, economies of scale, and institutions. The results mostly support a decentralizing effect of economic integration in general and of European integration in particular for heterogeneous EU countries, whereas participation of subnational governments in national decision-making is associated with more centralization.     

Economic policy uncertainty and real output: evidence from the G7 countries

We use economic policy uncertainty index, and impulse response based test to assess the impact of economic policy-related uncertainty on real economic activity. We use monthly data, over the period from 1985:1 to 2015:3, and impulse response functions to investigate how the economies of the G7 countries respond to positive and negative economic policy uncertainty shocks of different magnitudes. We find that economic policy uncertainty is countercyclical, that the effects of uncertainty shocks increase with size and that the responses of real output to positive and negative economic policy uncertainty shocks are country specific. Our research is important for policymaking and in favour of policies that remove economic uncertainty and its negative effects on the economy. We argue that some control over yellow journalism, a transparent tax system and a set of predictable fiscal and monetary policies can minimize the social costs of economic policy uncertainty.     

Assessing independent monetary policy in small, open and euroized countries: evidence from Western Balkan

This article approaches to the optimum currency area from the empirical side by investigating the costs of adoption of a single currency for small, open and euroized Western Balkan countries (WBC). Using several econometric techniques, this study attempts to answer three questions relevant for monetary integration of the WBC and similar transition countries: What are the constraints on an independent monetary policy? What is the need for operating an independent monetary policy? and What is the ability to conduct an independent monetary policy? The constraints on independent monetary policy in most of the WBC at this stage are relatively serious because of high levels of openness and euroization. They limit the ability of the central bank, which is oriented to price stability, to use the nominal exchange rate for achieving other goals (for example, output stabilization). Regarding the second question, the results from structural VAR framework suggest a low synchronization for supply and demand shocks between the WBC and the euro area, indicating potentially high costs of losing independent monetary policy. Furthermore, the results from Kalman filter technique inform that the shock convergence process is slow or absent in the WBC vis-à-vis the euro area. Regarding the last question, the results from cointegration and VAR analysis suggest that the ability to conduct an independent monetary policy, assessed by analyzing the interest rate channel as the most prominent transmission channel in the euro area, is relatively weak in the WBC.     

Ecosystem services, agriculture, and rural poverty in the Eastern Brazilian Amazon: Interrelationships and policy prescriptions

Policymakers seeking to modify financial incentives to increase the flows of ecosystem services in and around tropical moist forests must consider where to focus their attention and what collection of incentives can effectively achieve policy objectives. In most cases, policymakers focus on extensively forested areas where the flows of ecosystem services between agriculture and the environment is generally characterized by massive flows of carbon and soil nutrients from forests to agriculture. In these forest margin areas the stock of primary forest is eventually exhausted and the cheap ingredients provided by nature to agriculture become increasingly scarce. At this point, policy interest generally wanes, and agriculture and the environment begin slow declines in ecosystem service exchange, often with negative consequences for rural poverty. How does one promote increased flows of ecosystem services from agricultural lands without increasing poverty when forests and soils have been depleted? Can the standard instruments, e.g., payments for ecosystem services, be effective in such situations, and if so, do the costs to society of securing these services increase? Here we focus on the flows of ecosystem services at the end of the cycle of converting primary forest to agriculture. Primary data from the Bragantina area in the southeastern Brazilian Amazon, an area cleared of primary forest decades ago, are used to characterize smallholder production systems, to describe the flows of ecosystem services into and from these systems, and to develop a bioeconomic model of smallholder agriculture capable of predicting the effects of several types of policy action on ecosystem services provided by and to agriculture, and on-farm household incomes and food self-reliance. Of particular interest is the Proambiente Pilot Program in Brazil, which uses smallholder payment schemes to induce farmers to manage land and forest resources in ways that generate more ecosystem services. Baseline results suggest that smallholder agriculture leads to a gradual loss of ecosystem services (mainly above-ground and root carbon) provided by secondary forest fallows, and that reduction in fallow age leads to reductions in plant diversity. Intensifying agricultural activities accelerates this process, but considerably increases smallholder incomes. Paying farmers for ecosystem services linked to the retention of secondary forests and the Proambiente program both increase area in forest fallow, but the latter substantially reduces farm income because of input use restrictions. In general, programs aiming to promote the production of ecosystem services should not limit farmers' choices of ways to provide them. Employment and food self-reliance issues associated with policy options for increasing on-farm stocks of carbon and plant biodiversity are also explored.     

Nonlinearities in the real exchange rates: new evidence from developed and developing countries

This paper investigates nonlinearities in the dynamics of real exchange rates. We use Monte Carlo simulations to establish the size properties of the Teräsvirta-Anderson test, when the dynamics of the real exchange rate is influenced by an exogenous process. In addition, we show that a modified nonlinearity test, which includes additional right-hand-side variables, performs much better than the original in both Monte Carlo exercises and in the actual data on 1431 bilateral real exchange rate series. Finally, we investigate the dynamics of the real exchange rate for both developed and developing countries using the modified test for the recent floating period. In general, the results find a greater incidence of nonlinear dynamics for developing country real exchange rates.     

Impact of oil price shocks on output,inflation and the real exchange rate: evidence from selected ASEAN countries

This article analyses the impact of oil price shocks on real output, inflation and the real exchange rate in Thailand, Malaysia, Singapore, the Philippines and Indonesia (ASEAN-5) using a Structural VAR model. The cointegration tests indicate that the macroeconomic variables of these countries are cointegrated and share common trends in the long run. The impulse response functions reveal that oil price fluctuations do not impact the ASEAN-5 economies in the long run and much of its effect is absorbed within five to six quarters. The variance decomposition results further assert that with a few exceptions oil price shocks do not explain a significant variation in any of the variables under consideration. We also identify a very unique pattern of response to oil price fluctuations between Malaysia and Singapore and between the Philippines and Thailand. The pairs exhibit a high degree of similarity in their responses; they do not share any commonalities across the group.     

Temporary work and neoliberal government policy: evidence from British Columbia,Canada

We examine the impact of government policy on the incidence of temporary work by analysing the case of British Columbia (BC), Canada. The analysis is based upon the Canadian Labour Force Survey 1997–2004; temporary work is defined as work that is not expected to last for more than 6 months and includes seasonal, fixed‐term, casual, and temporary help agency work. A case study of BC provides a valuable opportunity to assess the impacts of neoliberal government policy, designed to increase labour market flexibility, on the extent of temporary work because we are able to compare labour market trends in BC both before and after the reforms introduced in 2001 and to compare BC with other provinces in Canada that were not subject to such large changes in their policy environments. We find that the shift to neoliberal policies in BC led to significant increases in the likelihood of workers finding themselves in temporary employment. We also find that the likelihood of being a temporary worker in BC in the post‐policy change period increases relative to all other provinces over the same period. Taken together, these results indicate that government policy is a key determinant of the level of temporary work. As such, the level of temporary work should be seen as a policy‐sensitive variable, rather than as a phenomenon determined solely by the exogenous forces of globalization and technological change.     

Species protection from current reserves: Economic and biological considerations, spatial issues and policy evaluation

The expansion of nature reserves is an important public policy strategy for the protection of biological diversity. In this paper, the authors use integer programming model structures derived from Location Set Covering Problem and Maximal Covering Location Problem approaches of location science as tools for selectively augmenting nature reserve sites for special status species protection. The linear programming models presented incorporate the following: biological constraints in the form of species' area needs; economic constraints in the form of opportunity costs of converting smaller administrative districts into nature reserves; and spatial constraints in the form of required connectivity among districts in site selection. The construction of a taxonomic data set for Thailand enables the implementation of the models, the comparison of results and evaluation of the differences in outcomes. The models build upon the existing nature reserve network in Thailand and suggest various public policy options that would augment the reserves for enhancing species protection and for possibly improving national conservation efforts at lowest costs.     

Innovation, embeddedness and policy: evidence from life sciences in three UK regions

This paper draws upon a survey of the life science and biotechnology regions of Oxford, Central Scotland and South West England to examine the innovation and embeddedness traits of the regions. The insights into the compositional weaknesses and strengths of the regions suggest opportunities and threats for the future development of the UK's life sciences and biotechnology. The discussion moves forward debates on biotechnology, regional innovation, regional economic development and policy by posing research questions relating to the gap of knowledge of two under-researched regions, the need for a differentiated view of regions and a public policy approach tailored towards them, as well as the prospects of 'engineering' high-tech regions. Some of the highlighted policy challenges are common to the three regions, while others are region-specific and reflect the variations of regional make-up and stage of development.     

Technological innovation and knowledge network in Asia: Evidence from comparison of information and communication technologies among six countries

South Korea, Taiwan, Singapore, Hong Kong, China and India have become much larger force in the world economy. Due to the enormous contribution of the use of information and communication technologies (ICT) in economic growth, this study investigates four main issues related to technological innovation and knowledge network in ICT among six countries. First, indicators of technological innovation were evaluated and used to compare capability of technological innovation in ICT between the six countries. Secondly, differences in innovation configurations among six countries were manifested. Thirdly, relative innovation strengths of these six countries were examined in five sub-technological fields. Finally, this study consists of analyzing the interactions into knowledge network among them; moreover, this study manifests the difference of knowledge network in five sub-technological field of ICT. The empirical findings of this study, based on analysis of a patent and citation dataset comprised of all patents granted by the U.S. Patents and Trademark Office (USPTO) to assignees in six countries from 1976 to 2006, are helpful to understand the comparative development of technological innovation of ICT in six countries.     

Monetary policy rules with PID control features: evidence from the UK,USA and EU

ABSTRACT

This paper considers the extent to which the monetary policy operations of three major central banks can be regarded as an application of Proportional-Integral-Derivative (PID) control rules. The paper outlines the general PID framework and estimates a series of dynamic models to identify how interest rate policy adjustments are affected by the rate of inflation and the level of macroeconomic activity. The paper examines data for the UK, the USA and the Eurozone. The results suggest that the PID rules can provide a useful theoretical and empirical framework for estimating central bank responses to the inflation and macroeconomic activity variables by improving the explanatory power of the Taylor rule model and determining the effect of the parameters.     

Later is better: mobile phone ownership and child academic development,evidence from a longitudinal study

ABSTRACT

Digital technologies have become an increasingly prominent feature of children’s lives both within and outside educational environments (McCoy, Quail, and Smyth 2012. Influences on 9-Year-Olds’ Learning: Home, School and Community. Dublin: Department of Children and Youth Affairs). Despite considerable media debate, we have little robust evidence on the impact of technology use on children’s development, both academically and socially. Much of the literature in this area relies on small-scale cross-sectional studies. Using longitudinal data on 8500 9-year-old children in Ireland, we examine the influence of early mobile phone ownership on children’s performance in reading and maths between 9 and 13 years of age. Across both reading and maths domains, children who already report owning a phone by the age of nine fare less well in terms of their academic development as they move into adolescence. The measured effects are sizeable, implying about 4 percentile lower ranking on standardised tests for an average student. Our results are consistent with the idea that there may be significant educational costs arising from early mobile phone use by children. Parents and policymakers should consider whether the benefits of phone availability for children are sufficiently large to justify such costs. We suggest a range of direct and indirect cognitive effects that could help explain these results.     

Fundamentals, the exchange rate and prospects for the current and future EU enlargements: evidence from Bulgaria, Croatia, Romania and Turkey

We analyze the link between macroeconomic fundamentals and exchange rate dynamics in two new and two potential EU member states: Bulgaria, Romania, Croatia, and Turkey. Given the different institutional settings of the exchange rate market in the countries of interest, we follow two different modelling strategies. For Romania and Turkey, we evaluate possible exchange rate misalignments based on a monetary model of exchange rate determination. In the case of Bulgaria and Croatia, with currency board and narrow-band peg arrangements against the euro, we discuss possible exit strategies and quantitatively assess the effects of the peg arrangements by means of simulation.