Does corruption impede economic growth in Pakistan?

The present study reinvestigates the impact of corruption on economic growth by incorporating financial development and trade openness in growth model in case of Pakistan. We have used time series data over the period of 1987–2009. We have applied structural break unit root test to test the integrating order of the variables. The structural break cointegration has also been applied to examine the long run relationship between the variables.The long run relationship between the variables is validated in case of Pakistan. We find that corruption impedes economic growth. Financial development adds in economic growth. Trade openness stimulates economic growth. The causality analysis has exposed the feedback effect between corruption and economic growth and same inference is drawn for trade openness and corruption. Trade openness and economic growth are interdependent. Financial development Granger causes economic growth implying supply-side hypothesis in case of Pakistan.     

Does dividend tax impede competition for corporate charters?

We develop a model of jurisdictional competition for corporate charters among the states in which a firm’s agency cost depends on the federal dividend income tax rate and the takeover regulations of its domicile state. When firms are mobile across states, the federal dividend income tax rate affects both the intensity of competition among the states and the equilibrium level of state takeover regulations. Our model shows that increasing dividend tax rate weakens the competition for corporate charters under a condition: dividend-paying and the market for corporate control are complementary corporate governance mechanisms. This condition holds empirically, suggesting that dividend tax not only discourages firms from paying dividends but also weakens their corporate governance by disincentivizing states to improve their corporate laws.     

World economic convergence: Does the estimation methodology matter?

An extant empirical literature produces evidence on economic convergence using methods that assume an underlying deterministic trend. Competing approaches that assume a stochastic trend, however, produce only limited evidence of economic convergence. In this paper we address this puzzling feature of the literature by providing a comprehensive analysis of economic convergence using three methodologies that cover all possible underlying assumptions: deterministic, stochastic, and combination trends. We also develop a method for an overall Stochastic Convergence Rate Index, that combines the outcomes of alternative stochastic tests and provides a single measure of the intensity of stochastic convergence. We consider 135 economies over the period 1980–2017. We find that economic convergence occurs at a global level through the formation of convergence clubs, and economic convergence emerges as a deterministic rather than a stochastic process. Tests that ignore deterministic trends tend to understate the evidence for convergence.     

Endogenous versus exogenous money: Does the debate really matter?

Whether money is exogenous or endogenous is the subject of one of the most important and intriguing debates in monetary economics. The aim of this article is to contribute to this longstanding debate through detailed examination of different notions of endogeneity and exogeneity of money. I argue that the debate has been too simplified. In reality, money can be either endogenous or exogenous, depending on several factors. Not only has the debate prompted some economists to draw too far-reaching conclusions, but it also misses the point.     

Love,money, and parental goods: Does parental matchmaking matter?

While parental matchmaking has been widespread throughout history and across countries, we know little about the relationship between parental matchmaking and marriage outcomes. Does parental involvement in matchmaking help ensure their needs are better taken care of by married children? This paper finds supportive evidence using a survey of Chinese couples. In particular, parental involvement in matchmaking is associated with having a more submissive wife, a greater number of children, a higher likelihood of having any male children, and a stronger belief of the husband in providing old age support to his parents. These benefits, however, are achieved at the cost of less marital harmony within the couple and lower market income of the wife. The results render support to and extend the findings of (Becker et al., 2015) where parents meddle with children’s preferences to ensure their commitment to providing parental goods such as old age support.     

Does “hot money” drive China's real estate and stock markets?

The paper investigates the extent of the impact from “hot money” or speculative capital inflow on the fluctuations of China's real estate market and stock market. The results indicate that hot money has driven up property prices as well as contributed to the accelerating volatilities in both markets due to its enormous size and its short-term characteristic of investing. In particular, we find that hot money ranks as the second largest contributor in the fluctuations of China's real estate prices. In the “risky” regime, which corresponds to more inflows and higher volatility of hot money, the effects are even more prominent.     

Does money have a role in the inflation process? Evidence from Australia

Inflation, defined as a sustained increase in the price level, is considered a monetary phenomenon, as it can be explained within the framework of money‐demand and money‐supply relationships. In the extant literature, money growth is shown to remain causally related to inflation across countries and over time, irrespective of the exchange rate regime and stability of the money‐demand function. Nevertheless, emerging literature suggests a diminishing role of money in the conduct of monetary policy for price stability, especially under inflation targeting. Monetary policy in Australia under inflation targeting since 1993 is an example of policy that denies a relationship between money growth and inflation. The proposition that money does not matter insofar as inflation is concerned seems odd in both theory and the best‐practice monetary policy for price stability. This paper uses annual data for the period 1970–2017 and quarterly data for the period 1970Q1–2015Q1. It deploys both the Johansen cointegration approach and the autoregressive distributed lag (ARDL) cointegration approach to investigate for Australia whether money, real output, prices and the exchange rate (non‐stationary variables) maintain the long‐run price‐level relationship that the classical monetary theory suggests in the presence of such stationary variables as the domestic and foreign interest rates. As expected, the empirical findings for Australia are consistent with the classical long‐run price‐level relationship between money, real output, prices and the exchange rate. The error‐correction model of inflation confirms the presence of a cointegral relationship among these variables; it also provides strong evidence of a short‐run causal relationship between money supply growth and inflation. On the basis of a priori theoretical predictions and empirical findings, the paper draws the conclusion that the monetary aggregate and its growth rate matter insofar as inflation is concerned, irrespective of the strategy of monetary policy for price stability.     

Does size matter? Implications of household size for economic growth and convergence

We assess the effects of changes in household size on the long‐run evolution of living standards and on cross‐country convergence. When the observed changes in average household size across countries are taken into consideration, growth in living standards is slower throughout the 20th century as compared to a measure based on per capita GDP. Furthermore, the speed of divergence between different countries before 1950 is faster and the speed of convergence after 1950 is slower after adjusting for the evolution in household size.     

Does the digital divide across countries lead to convergence? New international evidence

We examine the convergence of information and communication technologies (ICT) among 47 developed and emerging countries using annual data from 2000 to 2012. We construct an ICT development index using a principal component analysis. The results, based on a dynamic panel data model, reveal a divergence in ICT development. This study identifies two factors that drive a country's digitalization divergence level: the growth of per capita income and the ratio of urban to rural population. In addition, ICT divergence is higher in emerging countries than in developed countries.     

Smart fund managers? Stupid money?

Abstract .  We develop a model of mutual fund manager investment decisions near the end of quarters. We show that when investors reward better performing funds with higher cash flows, near quarter-ends a mutual fund manager has an incentive to distort new investment toward stocks in which his fund holds a large existing position. The short-term price impact of these trades increase the fund's reported returns. Higher returns are rewarded by greater subsequent fund inflows which, in turn, allow for more investment distortion the next quarter. Because the price impact of trades is short term, each subsequent quarter begins with a larger return deficit. Eventually, the deficit cannot be overcome. Thus, our model leads to the empirically observed short-run persistence and long-run reversal in fund performance. In doing so, our model provides a consistent explanation of many other seemingly contradictory empirical features of mutual fund performance.     

Does financial cooperation agreement improve the cointegration among ASEAN+3 money markets?

This paper aims to empirically examine the degree of cointegration among ASEAN+3 money markets in order to determine and adopt remedial actions pursuant to vulnerabilities in the region’s money markets that indicate an inability to prevent possible financial crises. In order to validate vulnerabilities, this paper investigates the degree to which money markets are integrated. Inter-bank lending rates are divided based on agreement periods as well as on income levels of regional economies. The VAR-based Cointegration test and the VECM have been applied in the investigation process. The findings are: (1) weak integration during the pre-agreement period; (2) substantial progress toward the post-agreement period; (3) both high- and low-income markets integrate in a cooperative way; and (4) the agreement produces an impact that is incomplete in so far as integrating the region’s money markets. The finding of this study offers implications for the regional makers.     

Can money buy EU love?

We explore the role played by Cohesion Policy in the Brexit referendum and the subsequent 2017 general election. Although the UK has been a net contributor to the EU, some regions receive significant amounts of regional aid funds. We find that while Cohesion Policy is positively correlated with the remain vote, this relationship is weak. Most of the variation in the remain vote is explained by economic factors. In contrast, there is a robust negative correlation between Cohesion Policy and voter turnout. We estimate that had there not been this negative relationship, some 2 million more voters would have participated in the referendum, which is more than the winning margin between the remain and leave votes. Our analysis of the 2017 election suggests that Conservatives lost and Labour gained votes in the regions that benefited from Cohesion Policy, while remain-supporting regions showed gains for the Liberal Democrats.     

Money,reserves, and the transmission of monetary policy: Does the money multiplier exist?

With the use of non-traditional policy tools, the level of reserve balances has risen in the US from roughly $20 billion before the financial crisis to well past $1 trillion. The effect of reserve balances in macroeconomic models often comes through the money multiplier, affecting the money supply and the bank lending. In this paper, we document that the mechanism does not work through the standard multiplier model or the bank lending channel. If the level of reserve balances is expected to have an impact on the economy, it seems unlikely that a standard multiplier story will explain the effect.     

Does monetary integration lead to income convergence in Africa? a study of the CFA monetary area

Portuguese Economic Journal - The CFA franc area is one of the oldest currency unions, but it has come under intense criticism recently for failing to promote economic growth and income convergence...     

Did the EMS encourage inflation convergence?

This paper studies the convergence of inflation rates over the period of 1983–93 for some countries within the European Monetary System. Three different price indices are considered for consumer goods, services, and industrial products. This study focuses on the difference between core and peripheral countries for measuring convergence speed. By using - and -convergence tools, as previously identified in studies on output growth convergence, it was found that the convergence process did not evolve equally whether considered through price indices, time, or countries.