Trade openness,financial openness,and macroeconomic volatility

This paper develops a new model of an open economy for a study of macroeconomic dynamics under different degrees of trade and financial openness. The model is estimated using quarterly data on the Chinese economy over the period 2005Q3-2020Q4 and then applied to analyze how macroeconomic volatility varies with trade and financial openness in several representative settings. We find that the impacts on macroeconomic volatility of trade openness and financial openness depend on the nature of the underlying shocks and a moderate degree of trade openness, together with a high degree of financial openness, yield the optimal welfare results in most cases. These results highlight that the effects of trade and financial openness on macroeconomic volatility differ in various situations and that their interactions can lead to different welfare results.     

Economic integration and government revenue from financial repression

We study a relationship between economic openness via financial and trade integration and government revenue from financial repression. An implicit budgetary saving, the financial repression revenue, as measured by the stock of government domestic debt multiplied by the difference between effective foreign and domestic interest rate, has declined significantly from the 1980s into the 2000s across the upper-income, the middle-income, and the low-income developing countries. While we find that both the financial and trade openness have a negative association with the financial repression revenue in the panel of countries, the effect of financial openness is stronger and the empirical correlations depend on the quality of governmental and budgetary management.     

贸易开放对中国创业的影响机制及其效应

本文利用2002—2014年中国31个省级区域的相关数据,研究贸易开放对创业的影响机制与效应。研究结果表明,贸易开放可以显著地促进中国创业的产生,并且与出口贸易相比,进口贸易开放对创业的正向影响作用更大。此外,市场化程度以及技术创新是贸易开放促进中国创业的重要影响机制。本文还通过工具变量方法有效处理了贸易开放对创业影响机制与效应的内生性问题,纠正了以往研究中未考虑内生性问题而造成估计结果的偏差,实证结果在进行多维度的稳健性检验后仍然成立     

Trade integration in the European Union: Openness,interconnectedness, and distance

This article presents a set of indicators to measure regional trade integration, focusing on the case of the European Union. We propose measures of openness, connectedness and integration which are tuned to evaluate not only how these components contribute to the advance of international integration, but also to control for the potential threat posed by the proliferation of regional trade agreements to trade globalization. Although this and related questions have been examined from several perspectives, the present article explicitly attempts to quantify how regional trade agreements either intensify or thwart trade globalization. Results show that the process of trade integration has intensified among European Union members, whereas integration with non-members is advancing slowly. Our indicators provide a more complete view of the differing speeds of integration, which depend on whether the component of integration considered is openness or connectedness.     

The effects of financial openness and financial efficiency on Chinese macroeconomic volatilities

This paper builds an open-economy DSGE model to study the effects of financial openness and financial efficiency on the macroeconomic volatilities and estimate the model with the Bayesian method and Chinese quarterly data from 2001Q1 to 2017Q4. We further test the validity of model predictions with panel analyses of Chinese provincial data from 1987 to 2016 and various robustness tests. The results show that: first, further financial openness will lead to an increase in output volatility but U-shaped changes in consumption and investment volatilities. Second, financial efficiency improvement helps to reduce the macroeconomic volatilities but has a diminishing marginal benefit. Third, our estimates of China's degree of financial openness and financial efficiency are both at the medium level close to the thresholds. It implies that further financial openness will dramatically increase the macroeconomic volatilities but whether financial efficiency improvement can mitigate instability is uncertain.     

金融开放、技术创新与产业结构调整——基于中等收入国家的分析

从金融开放对于经济结构转型的复杂影响角度出发,探讨扩大金融开放程度是否会促进经济结构转型,研究发现:(1)金融开放与产业结构调整之间呈现倒U型关系。金融开放对产业结构调整的过程中,金融开放存在一个最佳的限度;(2)在金融开放作用于产业结构的过程中,技术创新起到了显著的中介作用。因此,大力推进金融体系改革,提升我国金融发展质量,进而循序渐进推进金融开放,重视技术创新的中介作用对于我国经济结构转型意义重大。     

Financial openness and Chinese regional growth imbalance: New insight from spatial spillovers

This paper uses spatial panel methods and Chinese provincial data from 2003 to 2017 to study the spatial spillovers of financial openness on economic growth. The results show, first, a positive direct effect and an overall negative spatial spillover of financial openness on provincial growth. Second, there are two spatial spillover channels: a positive growth externality and a harmful resource competition among provinces. Third, we estimate the state dependence and dynamics of spatial spillover, and find that the negative spatial spillover is smaller in provinces with high levels of financial openness and in the long term; thus, the negative spatial spillover declined over time. These results are robust to the choice of SDM and GNS spatial econometrics methods and under different spatial weight matrices.     

INEQUALITY AND HAPPINESS

In recent years there has been an accumulation of empirical evidence suggesting that individuals dislike inequality. The literature has built upon estimating the degree of this dislike as well as its causes. The use of self‐reported measures of satisfaction or well‐being as a proxy for utility has been one of the empirical strategies used to this end. In this survey, we review the papers that estimate or examine the relationship between inequality and self‐reported happiness to conclude that inequality correlates negatively with happiness in Western societies. Some of the surveyed papers identify particular sources of heterogeneity on preferences over inequality. The evidence for non‐Western societies is more mixed and less reliable. Notwithstanding that, trust in the institutions seems to play an important role in shaping the relationship between income inequality and subjective well‐being. We conclude with suggestions for further research.     

The influence of scope, depth, and orientation of external technology sources on the innovative performance of Chinese firms

It is commonly accepted nowadays that external knowledge sources are important for firms' innovative performance. However, it is still not clear, what dimensions of firms' external knowledge search strategy are crucial in determining their innovation success and whether these search strategies are contingent on different innovation modes. In this study, we analyse how the innovative performance is affected by the scope, depth, and orientation of firms' external search strategies. We apply this analysis to firms using STI (science, technology and innovation) and DUI (doing, using and interacting) innovation modes. Based on a survey among firms in China, we find that greater scope and depth of openness for both innovation modes improves innovative performance indicating that open innovation is also relevant beyond science and technology based innovation. Furthermore, we find that decreasing returns in external search strategies, suggested by Laursen and Salter (2006), are not always present and are contingent on the innovation modes. Next, we find that the type of external partners (we label it “orientation of openness”) is crucial in explaining innovative performance and that firms using DUI or STI innovation modes have different sets of relevant innovation partners. This shows that the orientation of openness is an important dimension—in addition to the scope and depth of openness. As respondents are located in China, this study provides evidence that open innovation is also relevant in developing countries.     

开放条件下中国货币与经济关联度变动原因实证研究

本文运用动态条件相关(DCC)方法估计中国各层次货币与实体经济的关联度。研究发现,1994年前,关联度始终在低位波动,之后大幅提高,总体呈上升趋势。通过在模型中引入金融深化度和经济开放度,本文从不同的侧面解释了货币与经济关联度变动的原因。虽然金融深化度和经济开放度对关联度的影响程度随货币层次的提高而增强,但作用方向却不完全相同;金融深化度越高,经济开放度越低,关联度越强,这表明金融深化理论与中国国情相适应。这对于改革开放具有较强的现实意义。政府通过优先发展金融,深化金融体制改革,能够提高货币对经济增长的效能,促进经济结构的转型和经济持续增长。     

Do Natural Barriers Affect the Relationship Between Trade Openness and Growth?*

This article investigates whether there are threshold effects in the relationship between openness and productivity growth that are fashioned by a country's natural barriers, using a cross‐country growth model. Alternative methods of modelling thresholds are explored. An endogenous threshold model is shown to be preferable to the use of interaction effects. The results identify critical levels of natural barriers which affect how greater openness or liberalization impacts on productivity growth. We find that only countries with higher natural barriers receive growth benefits from trade liberalization.     

Competitive strategy for open and user innovation

I study the incentives to open technologies in imperfectly competitive markets with user innovation. Firms may choose to open part of their knowledge or private information so that it becomes freely accessible to users. Openness decisions are governed by a trade‐off between collaboration and appropriability: by becoming more open, a firm encourages user innovation but hampers its ability to capture value. I find that large firms are less open and invest more in product development than small firms, and that firms react to greater openness from rivals by becoming more open. I also show that compatibility and spillovers have a negative effect on openness, and that firms become more open as the number of competitors increases.     

Financial development and financial liberalization in Asia: Thresholds,institutions and the sequence of liberalization

This paper investigates whether financial openness leads to financial development after controlling for the level of legal/institutional development, and whether trade opening is a precondition for financial opening. The focus is on Asia. In a panel encompassing 87 less developed countries over the period 1980 to 2000, a higher level of financial openness is found to spur equity market development only if a threshold level of legal development has been attained, a condition which tends to prevail particularly among emerging market Asian countries. On the issue of sequencing, trade openness is found to be a prerequisite for successful inducement of financial development via capital account liberalization.     

Conflict and well-being of civilians: The case of the Russian-Ukrainian hybrid war

This paper investigates the contemporaneous effect of conflict on civilians living outside of the conflict zone. Applying a multi-dimensional concept of well-being, it uses two large household surveys over 2012–2016 to analyze how the Russian-Ukrainian hybrid war affected the financial well-being and health of people in both countries. We find that the conflict significantly worsened financial well-being in both countries. The impact mostly operates by worsening expectations about financial well-being and is inversely related to the distance from the conflict zone. Our analysis indicates an increase in chronic diseases in Ukraine over a longer period. Mental health is negatively impacted in both countries at the earlier stages of the conflict. However, in Russia this effect is significant only in the region bordering the conflict zone, while in Ukraine it is significant in regions farther away from the conflict zone.     

Which formula for national happiness?

The World Happiness Report is published by the United Nations Sustainable Development Solutions Network and contains an international ranking of national average happiness, as measured by surveys of personal life evaluations. It also contains an analysis which tries to explain the happiness figures from more than 150 countries using data on six key variables. That analysis assumes the factors combine in an additive manner and therefore operate independently of each other. By contrast, we explore a multiplicative model, which allows for interactivity or synergy between factors, as well as the possibility of diminishing marginal benefit at higher levels of achievement. We find that this model provides a better fit to the data and is therefore superior in its explanatory power. The implication for policy-makers is that they should focus on improving those factors which are the lowest for their nation as this will provide greater relative benefits to subjective well-being. At an individual level this means focusing on improving conditions for those who are experiencing the lowest levels of well-being.     

Economic Activity and Social Indicators: A Rural-Urban Discontinuum?

A bstract . Comparisons of urban and rural areas tend to assume that a rural-urban continuum exists as regards economic and social indicators of well-being and that rural places are fairly homogeneous. Analysis of Kentucky counties indicates that rural-urban differences exist as regards economic well-being and objective social indicators. However, rural-urban differences are not consistent with respect to subjective social indicators; and there are important differences among economic types of rural counties as regards both economic and social indicators. Thus, the rural-urban continuum is not general and it is important to distinguish types of rural counties.     

CEO Succession Mechanisms,Organizational Context,and Performance: A Socio‐Emotional Wealth Perspective on Family‐Controlled Firms

This article extends the literature on CEO succession and financial performance by addressing corporate owners' mixed motives and desires to protect their interest in being in business. We draw on a Socio‐Emotional Wealth (SEW) perspective to investigate how the choice of one of three succession mechanisms – relay succession, ‘horse races’ among internal CEO candidates, and hiring from outside – may effectively balance trade‐offs between corporate owners' non‐financial SEW motives and the firm's financial performance. We find that implementing one of these succession mechanisms reduces the negative impact that typically characterizes CEO transitions in family firms. We also show that family presence on the board of directors offsets the benefits of having selected these balancing succession mechanisms, in either placing too much emphasis on SEW, or creating negative dynamics that make the chosen succession mechanisms less effective.     

配偶收入如何影响自身生活幸福感？——基于中国综合社会调查（2006）的实证分析

本文从理论上梳理了配偶收入影响自身幸福感的两种影响渠道:经济支持渠道和收入比较渠道.通过这两种渠道,配偶收入对自身幸福感分别产生正效应和负效应,综合影响取决于这两种效应的相对大小.进而,基于中国综合社会调查(2006)的微观数据,我们采用有序Probit模型进行了经验分析.研究发现,第一,配偶收入和自己的收入均对自身“潜在幸福感”有显著的正向影响,但配偶收入的影响程度小于自己的收入.这表明,就对幸福感的影响而言,自己的收入和配偶的收入并不完全是同质的.第二,对年龄较大的群体和高收入群体,配偶收入的正向影响不显著,而对年龄较小的群体和低收入群体,配偶收入的正向影响则是显著的.这表明,人们在不同经济体制下接受的价值观念以及自身收入水平的高低是配偶收入影响自身幸福感的调节变量.     

Trade Openness and Spatial Inequality in Emerging Countries

Abstract

Emerging world countries have experienced over the last two decades a significant change in their trade patterns. Bold trade reforms have been followed by rapid rises in international trade levels. However, despite these radical changes, we know remarkably little about how changes in trade patterns are affecting the evolution of regional inequality in the developing world. This paper addresses the link between trade openness and spatial inequality across 22 emerging countries over the period between 1990 and 2006. Our findings show that changes in international trade bring about a significant rise in within-country inequality across the developing world and that this impact is greatest in the poorest countries. This result is robust to the inclusion of a number of control variables, and to changes in the specification of the sample and in the measure used to quantify the level of regional disparities. Consequently, the increase in trade exposure across the emerging world, while possibly benefiting the countries involved in the process in aggregate terms, is generating winning and losing regions.     

How do trade openness,public expenditure and institutional performance affect unemployment in OIC countries? Evidence from the DCCE approach

This study explores the relationship between trade openness, public expenditure, institutional performance, and unemployment in member countries of the Organization of Islamic Cooperation (OIC) (formerly the Organization of the Islamic Conference). The conventional panel data techniques overlook cross-sectional dependence and yield-biased results. A new methodology called dynamic common correlated effects (DCCE) is employed to deal with the issue of cross-sectional dependence. The long-run results demonstrate that trade openness is inversely and significantly associated with overall unemployment and youth unemployment in lower-income as well as all the OIC economies and positively correlated in the higher-income OIC group. Public expenditure has an inverse and significant correlation with unemployment in OIC countries overall and higher-income OIC countries. Moreover, institutional performance and foreign direct investment are negatively related to unemployment in all OIC economies. The research shows the need for the continuation of open trade policies, strong institutions, and higher public expenditure in the OIC countries in order to decrease overall unemployment—in particular, youth unemployment.