Is health care a necessity or a luxury? Evidence from urban China

This article uses a smooth transition regression (STR) model to research the income elasticity of the health care expenditure of China’s urban residents in the 1990–2013 period. The results demonstrate that if the real income of China’s urban residents that lags a period is taken as a transition variable, urban residents’ health expenditure follows an LSTR1 nonlinear two-regime model. Here, the income elasticity of health care expenditure of China’s urban residents is 1.4919 in 1990–2002 and 1.2216 in 2003–2013. Overall, the income elasticity of health care of China’s urban residents is greater than 1, indicating that health care is a luxury.     

Is mortality spatial or social?

Mortality modelling for the purposes of demographic forecasting and actuarial pricing is generally done at an aggregate level using national data. Modelling at this level fails to capture the variation in mortality within country and potentially leads to a mis-specification of mortality forecasts for a subset of the population. This can have detrimental effects for pricing and reserving in the actuarial context. In this paper we consider mortality rates at a regional level and analyse the variation in those rates. We consider whether variation in mortality rates within a country can be explained using local economic and social variables. Using Northern Ireland data on mortality and measures of deprivation we identify the variables explaining mortality variation. We create a population polarisation variable and find that this variable is significant in explaining some of the variation in mortality rates. Further, we consider whether spatial and non-spatial models have a part to play in explaining mortality differentials.     

Is there a profit premium for market-oriented firms? A panel data investigation

ABSTRACT

This paper provides an empirical investigation of the impact of market orientation on firms' economic performance during the period 1998–2012 using a panel of Italian manufacturing firms. We introduce a dynamic concept of market orientation, in that we define a market-oriented firm as one that persistently undertakes product and marketing innovation, while at the same time introducing organizational changes and training efforts to manage and improve its knowledge assets over the long term. This notion of market orientation is therefore crucially related to the so-called dynamic capability approach. The related empirical model shows that being a market-oriented firm significantly affects profitability, in a framework in which this latter is simultaneously estimated with productivity, thus allowing for more precise estimates of the profit premium which is earned accordingly.     

Is smoking a fiscal good?

Even though smokers incur higher health expenditures than nonsmokers of the same age, smokers have significantly higher mortality rates, so the expected lifetime health expenditure for a smoker is actually lower than for a nonsmoker. Because of this fact, some politicians and policy-makers have argued that society might actually be better off promoting smoking rather than discouraging it. We consider this argument in a general-equilibrium model where health expenditures are paid for by a single-payer health-care system financed by taxes. Because the percentage increase in the tax base is larger than the percentage increase in health-care expenditures, the elimination of smoking actually decreases the budget-balancing health-care tax rate.     

That elusive elasticity and the ubiquitous bias: Is panel data a panacea?

There is often assumed to be a unit elasticity of substitution between capital and labour. But estimates based on neoclassical capital demand equations frequently find a smaller value. Recent time-series work for the United States and Canada has suggested that, once the biases inherent in estimating cointegrating vectors are properly accounted for, the elasticity could indeed be close to 1. We investigate this possibility for the United Kingdom. First we use aggregate data and find that the estimated elasticity is in the neighbourhood of 0.4. We then exploit a unique industry-level dataset for the United Kingdom to try and further pinpoint our estimates. Estimates using dynamic panel data methods are close to our benchmark estimate using aggregate data, providing a robust statistical rejection of a unit elasticity in UK data.     

Is there a unit root in the inflation rate? New evidence from panel data models with multiple structural breaks

In this article, we examine whether or not the inflation rate for 17 OECD countries can be modelled as a stationary process. We find that (1) conventional univariate unit root tests without any structural breaks generally reveal that the inflation rate contains a unit root; (2) the KPSS univariate test with multiple structural breaks reveals that for 10 out of 17 countries inflation is stationary; and (3) the KPSS panel unit root test reveals strong evidence for stationarity of the inflation rate for panels consisting of countries which were declared nonstationary by univariate tests.     

Is the natural resource production a blessing or curse for China's urbanization? Evidence from a space–time panel data model

This paper provides an analytical framework to evaluate under what conditions the natural resource production could promote or hinder urbanization process, focusing on factors mostly relevant for China. Considering both structure breaks and cross-sectional dependence as well as spatial spillovers, the study deploys a comprehensive approach to rigorously prove the validity of the proposed space–time panel data model that includes the second generation panel unit root test and panel cointegration, panel threshold regression and spatial panel Durbin model. The results not only offer strong evidences that the natural resource production non-linearly impacts on urbanization process, but also show that there exists a dynamic response over time and space as well as space–time diffusion impact, in which these percentages are different from each other confirming an asymmetric effect of the natural resource production on urbanization process.     

Do social exclusion and remoteness explain the digital divide in Australia? Evidence from a panel data estimation approach

ABSTRACT

Despite rapid digital development in the past two decades, the remote parts of Australia still experience disadvantages with the adoption and diffusion of digital technology. As the adoption of information and communication technology continues to increase at a significant rate, investigating the underlying factors of the digital divide in general and also in the context of social exclusion in Australia is pertinent. The current study fills the gap in the existing body of knowledge by exploring the effect of socio-demographic factors and remoteness on the digital divide landscape with a country-specific focus on Australia. Using state-wide longitudinal data covering the 1998–2015 period within the panel data estimation framework, this study finds that digital divide is significantly associated with socio-demographic factors and remoteness in Australia. Moreover, the findings affirm that in addition to telecommunication infrastructure development, policymakers should also underscore socio-demographic factors in shaping digital inclusion strategies.     

Is an unfunded social security system good or bad for growth? A theoretical analysis of social security systems financed by VAT

This study investigates how unfunded public pensions financed by value added tax (VAT), as discussed in Japan, affect economic growth and whether payroll tax (PT) or VAT is the more growth‐friendly tax structure for financing public pensions. We examine these issues using overlapping generations models with parental altruism and find that a public pension system financed by VAT may increase economic growth when bequests are operative. By contrast, when bequests are inoperative, public pensions hinder growth unless agents are sufficiently patient. Finally, public pensions financed by VAT are more growth‐friendly than those financed by PT.     

Is migration a good substitute for education subsidies?

Assuming a given educational policy, the recent brain drain literature reveals that skilled migration can boost the average level of schooling in developing countries. In this paper, we introduce educational subsidies determined by governments concerned by the number of skilled workers remaining in the country. Our theoretical analysis shows that developing countries can benefit from skilled emigration when educational subsidies entail high fiscal distortions. However when taxes are not too distortionary, it is desirable to impede emigration and subsidize education. We then investigate the empirical relationship between educational subsidies and migration prospects, obtaining a negative relationship for 105 countries. Based on this result, we revisit the country specific effects of skilled migration upon human capital. We show that the endogeneity of public subsidies reduces the number of winners and increases the magnitude of the losses.     

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.     

Is real GDP stationary? Evidence from a panel unit root test with cross-sectional dependence and historical data

We use historical data that cover more than one century on real GDP for industrial countries and employ the Pesaran panel unit root test that allows for cross-sectional dependence to test for a unit root on real GDP. At first, we find strong evidence against the unit root null. Our results seem to be robust to the chosen group of countries and, in most cases, the sample period. However, the sequential panel selection method reveals that the rejection of the unit root null is due to the stationarity of real GDP in a few countries only. Real GDP is less stationary mostly in fixed exchange rate regimes like the Gold Standard and the Bretton Woods system.     

Is diversity good or bad? Evidence from eSports teams analysis

We use eSports data to construct an empirical model to measure the effect of diversity on team performance. Different kinds of diversities are considered, diversity of culture, diversity of language and diversity of skill. Our main results are that cultural diversity is beneficial for team performance: the absence of diversity reduces performance by 30%. However, language and experience diversity negatively affect results. Taking the difference in the results into account, we conclude that firms should not thoughtlessly maximize team diversity: different kinds of diversity have different integration and communication costs.     

Is food consumption a good proxy for nondurable consumption?

This paper examines whether there is a discrepancy in estimating the elasticity of intertemporal substitution using food consumption instead of nondurable consumption data. We show that a discrepancy exists and that the discrepancy increases as nondurable consumption increases.     

Is inflation targeting a good remedy to control inflation?

Since the 1990s inflation targeting (IT) has been adopted by several central banks as a strategy for monetary policy. It is expected that the adoption of this monetary regime can reduce inflation and inflation volatility. This article is concerned with these issues and makes use of the Propensity Score Matching methodology on a sample of 180 countries for the period from 1990 to 2007. For analysis, the sample is split into two sets of countries (advanced and developing). The findings suggest that the adoption of IT is an ideal monetary regime for developing economies and, in addition to reducing inflation volatility, can drive inflation down to internationally acceptable levels. Regarding advanced economies, the adoption of IT does not appear to represent an advantageous strategy. In brief, the empirical results indicate that the adoption of IT is useful for countries that must enhance their credibility for the management of monetary policy.     

Is there an export or import-led productivity growth in rapidly developing Asian countries? a multivariate VAR analysis

In contrast to cross-country studies, the paper investigates the relationships between trade and labour productivity for nine rapidly developing Asian countries in a time-series framework using a vector error-correction model. Independent tests on the long-run and short-run relationship between trade variables of exports and imports and productivity are conducted. The results suggest that trade has an important impact on productivity and output growth in the economy, however it is imports that provide the important?‘virtuous’?link between trade and output growth. The results indicate that exports and imports have qualitatively different impacts on labour productivity. The long-run result shows that there is no causal effect from exports to labour productivity growth for Hong Kong, Indonesia, Japan, Taiwan and Thailand; thereby suggesting that there is no export-led productivity growth in these countries. However, significant causal effects were found from imports to productivity growth, suggesting import-led productivity growth in India, Indonesia, Malaysia, Philippines, Singapore and Taiwan. In addition, the results indicate that imports tend to have greater positive impact on productivity growth in the long run.     

Does good governance matter for FDI? New evidence from emerging countries using a static and dynamic panel gravity model approach

This paper assesses the impact of institutional factors on foreign direct investment (FDI) attractiveness using a pool of 25 emerging host countries (ECs) for the period 1996–2012. In particular, the paper aims to examine whether higher institutional quality and good governance do improve FDI attractiveness, and thereby to identify which institutional factors are the main drivers of FDI in ECs. Using a static and dynamic panel gravity model with various estimation techniques, we find that FDI is positively and significantly influenced by political stability, government effectiveness and regulatory quality. The remaining set of governance indicators is found to be statistically significant and negatively linked to FDI. Our findings also show that factors like a larger GDP per capita difference between investing partner and ECs, higher degree of trade openness and better infrastructure have positive and significant effects on FDI attractiveness. These results have important policy implications for ECs. Fostering FDI inflows into these countries requires policymakers to improve the quality of their institutions and business climate through implementing sound economic policies and regulations.     

Is there really hysteresis in the OECD unemployment rates? New evidence using a Fourier panel unit root test

Empirica - We investigate the hysteresis hypothesis by proposing a heterogeneous panel unit root test that allows for gradually changing trends and cross-sectional dependence (CSD) among panel...     

Is technology acquisition enough to improve China's product quality? Evidence from firm-level panel data

As developing countries open themselves up to trade, many industrial firms in these countries are finding it difficult to compete internationally due to poor product quality and low product variety. Although China has been the largest producer of crude steel since 1996, China's steel firms have produced an overabundance of low-quality steel while domestic purchasers of steel have increasingly demanded higher quality steel products. Many have argued that for Chinese steel firms to improve product quality they must adopt more advanced technologies. Employing firm-level panel data of steel firms in China, we econometrically test the relative importance of two possible sets of factors affecting a firm's ability to utilize technology to improve product quality: technology acquisition factors and technology absorptive capacity factors. We find that technology complements such as in-house R&D and foreign knowledge must be combined with technology for Chinese firms to improve product quality.     

Innovation dynamics in the EU: convergence or divergence? A cross-country panel data analysis

This paper investigates whether a convergence or divergence of national innovation capabilities of the 15 EU countries occurs in the course of time. An answer to this question permits immediate conclusions with regard to the success prospects of a convergence of per capita incomes and labor productivities within the EU. For the empirical analysis based on patents granted at the US-Patent and Trademark Office, unit root tests for time series and panel data are used to scrutinize the convergence hypothesis. Taking all results together, evidence points to the fact that an absolute convergence of innovation capabilities is an exception. However, for a number of countries the results suggest either conditional convergence or convergence to their own growth paths.