Exploring the link between research and economic growth: an empirical study of China and USA

In this paper, we explore the link between scientific and technical research and economic growth in China and USA over the sample period 1981–2012 using the extended Cobb–Douglas model with capital per worker and the quantity of scientific and technical journal articles (research publications) per worker. We examine the cointegration relationship and present the short-run and long-run results using the autoregressive distributed lag bounds procedure. Further, we examine the direction of causality between research publications per worker results and economic growth variables using the Toda and Yamamoto (J Econom 66(1–2):225–250, 1995) procedure. Our results indicate for both countries research publications per worker positively influence the output per worker both in the short-run and the long-run. The causality results for China indicate a bi-directional causality between research publications per worker and output per worker, duly emphasizing the mutually reinforcing effect. In case of USA, we note a unidirectional causation output per worker to research publications per worker indicating that output Granger cause research publications.     

Role of health expenditure and ICT in a small island economy: a study of Fiji

The economy of Fiji has witnessed a pervasive role of information and communications technology (ICT) on one hand and an increase in lifestyle diseases on the other. The government however has put in policies to exploit the gains from ICT and increased budget allocation to combat some of the burgeoning health problems in their effort to modernize the economy. In this paper, we explore the short-run and long run effects of health expenditure and ICT on per worker output within the augmented Solow framework (Q J Econ 70:65–94, 1956) and the autoregressive distributed lag bounds procedure (Pesaran et al. in J Appl Econ 16:289–326, 2001) over the period 1979–2010. The results show that health expenditure has a positive and significant effect in the short-run only (0.11 %). ICT has positive and significant effect both in the short-run (0.90 %) and the long-run (0.62 %). Further, the Granger-causality tests reveals a strong bi-directional causality between health expenditure and per worker output, a unidirectional strong causation from capital per worker to ICT development, and a weak causation from ICT to per worker output.     

Exploring the role of technology,tourism and financial development: an empirical study of Vietnam

Vietnam is one of the emerging and industrializing developing countries in East Asia that has experienced a growth in tourism, information and communications technology (ICT) and financial development over the last three decades largely supported by significant structural reforms to escalate its path towards modernization and industrialization by 2020. In this paper, we explore the short-run and long-run effects of tourism, ICT and financial development over the period 1980–2010. Further, we examine the causation between these contemporary drivers of growth. The results show tourism has a positive and statistically significant effect in the short-run whereas ICT and financial development have a momentous positive and significant effect in the long-run. The causality results show unidirectional causation from capital per worker, ICT and financial development to output per worker; from ICT and financial development to capital per worker; and from capital per worker to tourism. Further, we also note a bi-directional causation between tourism and output per worker indicating their mutually reinforcing effect in the economy.     

Foreign capital inflows, economic growth and stock market capitalization in Asian countries: an ARDL bound testing approach

This study investigates the effects of foreign capital inflows and economic growth on stock market capitalization in 18 Asian countries by using the panel data from the period of 2000–2010. The ARDL bound testing cointegration approach confirms the valid long run relationship between the considered variables. Results indicate that foreign direct investment has significant negative and economic growth has significant positive relationship with the stock market capitalization, whereas, the results of workers’ remittances is found insignificant in long run. The error correction model confirms the significant positive relationship of economic growth and workers’ remittances while, FDI has negative and significant impact on stock market capitalization in short run. Results of causality test based on Toda and Yamamoto (J Econom 66: 225–250, 1995) show the bidirectional causal relationship of foreign direct investment and economic growth with stock market capitalization. However, no causal relationship is found in between workers’ remittances and stock market capitalization. It is suggested that investor should not idealize the inflow of workers’ remittances to invest in Asian stock markets in long run. Simultaneously, size of the economy is a better leading indicator for Asian stock markets. On the other hand, inflows of FDI may mislead the investor to invest. Investor should keep on eye whether FDI come in the competition of domestic market or not? If this happens so investor should not invest in the stock market of host country.     

Exploring the nexus between capital inflows and growth in Latin America and the Caribbean: a study of clusters led by Brazil and Mexico

In this paper, we used pooled regression within the ARDL approach and augmented Solow framework to explore the emerging uniformity and polarization in the two clusters led by Brazil and Mexico in Latin America and the Caribbean, adopted from Izquierdo and Talvi http://idbdocs.iadb.org/wsdocs/getdocument.aspx?docnum=35816781, 2011. The results show that effects of capital productivity and official development assistance are predominantly led by Brazil cluster while remittances, foreign direct investment and domestic credit are led Mexico cluster. While ODA is has a negative effect on the region’s growth, capital productivity, remittances, domestic credit and foreign direct investment are promising indicators for short-run and long-run growth in the region.     

Directional output distance functions: endogenous directions based on exogenous normalization constraints

In response to a question raised by Knox Lovell, we develop a method for estimating directional output distance functions with endogenously determined direction vectors based on exogenous normalization constraints. This is reminiscent of the Russell measure proposed by Färe and Lovell (J Econ Theory 19:150–162, 1978). Moreover it is related to the slacks-based directional distance function introduced by Färe and Grosskopf (Eur J Oper Res 200:320–322, 2010a, Eur J Oper Res 206:702, 2010b). Here we show how to use the slacks-based function to estimate the optimal directions.     

Impact of economic growth volatility on income inequality: ASEAN experience

The study attempts to examine the symmetric and the asymmetric impact of volatility of economic growth on the inequality of income in the major ASEAN economies over the period 1980–2015. Financial development, trade openness as a proxy of globalization, inflation, human capital formation, and fiscal policy are utilized as major control variables. The paper tries to explore the causal association between inequality of income distribution and economic growth volatility, exploring simultaneously the long-run association and the short-run dynamics in the time series structure. The study applied Clemente–Montanes–Reyes unit root test to identify the structural break in the time series. Further, the cointegrating relationship of the time series observations was explored by applying the ARDL (linear) bounds test approach along with the nonlinear ARDL for making fruitful comparisons in the long-run relationship among the variables. The countries chosen are Malaysia, Indonesia, Thailand, Singapore and The Philippines. The empirical findings strongly suggest a long-run cointegrating relationship between income inequality and growth volatility with a positive and statistically significant impact. Also, the causality analysis was explored using the Toda and Yamamoto (1995) method of Granger causality. The causality test shows that there exists bidirectional causality from inequality transmission to economic growth volatility. The implications that are developed from this study helps us to understand the various policy reforms in the ASEAN region, that are more transparent and can make these economies less susceptible to risks.     

Closed-skew normality in stochastic frontiers with individual effects and long/short-run efficiency

This paper considers the estimation of Kumbhakar et al. (J Prod Anal. doi:10.1007/s11123-012-0303-1, 2012) (KLH) four random components stochastic frontier (SF) model using MLE techniques. We derive the log-likelihood function of the model using results from the closed-skew normal distribution. Our Monte Carlo analysis shows that MLE is more efficient and less biased than the multi-step KLH estimator. Moreover, we obtain closed-form expressions for the posterior expected values of the random effects, used to estimate short-run and long-run (in)efficiency as well as random-firm effects. The model is general enough to nest most of the currently used panel SF models; hence, its appropriateness can be tested. This is exemplified by analyzing empirical results from three different applications.     

Decomposing the change in profit of Taiwanese banks: incorporating risk

This study follows the structure of Grifell-Tatjé and Lovell (Manag Sci 45:1177–1193, 1999) and uses the non-parametric approach to decompose the change in profit of Taiwanese banks into various drivers. However, risk was never considered in the papers based on profit decomposition. Without considering risk, the empirical results will be biased while decomposing the change in profit. In fact, risk is a joint but undesirable output which cannot be freely disposed of by various regulations. The non-performing loan (NPL) is employed as a risk indicator for decomposing the change in profit in this study. This study also performs a three-way comparison among (1) the original Grifell-Tatjé and Lovell (Manag Sci 45:1177–1193, 1999) analysis (OGLA) model that ignores NPL, (2) the extended Grifell-Tatjé and Lovell (Manag Sci 45:1177–1193, 1999) analysis (EGLA) model that is based on the OGLA model and incorporates NPL, and (3) the directional distance function (DDF) model that is based on Juo et al. (Omega 40:550–561, 2012) and incorporates NPLs to see if incorporating the undesirable output matters. The decomposition of the change in profit in the above three models is then illustrated using Taiwanese banks over the period 2006–2010.     

Public infrastructure investment,output dynamics,and balanced budget fiscal rules

We study the dynamic macroeconomic effects of public infrastructure investment under a balanced budget fiscal rule, using an overlapping generations model of a small open economy. The government finances public investment by employing distortionary labor taxes. The balanced budget rule implies a negative short-run output multiplier that exceeds (in absolute terms) the positive long-run output multiplier. Larger public capital spillovers sharpen the intertemporal output tradeoff. In contrast to conventional results regarding public investment shocks, we obtain dampened cyclical responses for plausible parameter values. The cyclical dynamics arise from the interaction between the labor tax rate, the tax base, and the intergenerational spillover effects. We show that financing scenarios involving public debt creation can substantially reduce the short-run output contraction and the transitional macroeconomic fluctuations induced by public investment.     

Spillovers from universities: Evidence from the land-grant program

This paper estimates the short- and long-run effects of universities on geographic clustering of economic activity, labor market composition and local productivity and presents evidence of local spillovers from universities. I treat the designation of land-grant universities in the 1860s as a natural experiment after controlling for the confounding factors with a combination of synthetic control methods and event-study analyses. Three key results are obtained. First, the designation increased local population density by 6 percent within 10 years and 45 percent in 80 years. Second, the designation did not change the relative size of local manufacturing sector. Third, the designation enhanced local manufacturing output per worker by $2136 (1840 dollars; 57 percent) in 80 years while the short-run effects were negligible. This positive effect on the productivity in non-education sectors suggests the existence of local spillovers from universities. Over an 80-year horizon, my results indicate that the increase in manufacturing productivity reflects both the impact of direct spillovers from universities and general agglomeration economies that arise from the increase in population.     

Employee Mental Illness: Managing the Hidden Epidemic

While the high prevalence of mental illness in workplaces is more readily documented in the literature than it was ten or so years ago, it continues to remain largely within the medical and health sciences fields. This may account for the lack of information about mental illness in workplaces (Dewa et al. Healthcare Papers 5:12–25, 2004) by operational managers and human resource departments even though such illnesses effect on average 17 % to 20 % of employees in any 12-month period (MHCC 2012; SAMHSA 2010; ABS 2007). As symptoms of mental illness have the capacity to impact negatively on employee work performance and/or attendance, the ramifications on employee performance management systems can be significant, particularly when employees choose to deliberately conceal their illness, such that any work concerns appear to derive from issues other than illness (Dewa et al. Healthcare Papers 5:12–25, 2004; De Lorenzo 2003). When employee non-disclosure of a mental illness impacts negatively in the workplace, it presents a very challenging issue in relation to performance management for both operational managers and human resource staff. Without documented medical evidence to show that impaired work performance and/or attendance is attributable to a mental illness, the issue of performance management arises. Currently, when there is no documented medical illness, performance management policies are often brought into place to improve employee performance and/or attendance by establishing achievable employee targets. Yet, given that in any twelve-month period at least a fifth of the workforce sustains a mental illness (MHCC 2012; SAMHSA 2010; ABS 2007), and that non-disclosure is significant (Barney et al. BMC Public Health 9:1–11, 2009; Munir et al. Social Science & Medicine 60:1397–1407, 2005) such targets may be unachievable for employees with a hidden mental illness. It is for these reasons that this paper reviews the incidence of mental illness in western economies, its costs, and the reasons why it is often concealed and proposes the adoption of what are termed ‘Buffer Stage’ policies as an added tool that organisations may wish to utilise in the management of hidden medical illnesses such as mental illness.     

Exploring competitiveness in banking sector of a small island economy: a study of Fiji

The paper explores the competitiveness in the banking sector in Fiji using the Panzar and Rosse (J Ind Econ 35:443–456, 1987) method. We compute the concentration ratios and Herfindahl–Hirschman index based on total assets, loans, and deposits to examine the concentration level. To compute the Panzar-Rosse H-statistics, we use fixed effect regression method duly controlling for heterogeneity. The results show banks in Fiji exhibit monopolistic behavior and are biased towards monopoly/conjectural variation short-run oligopoly upon examining the significance level of the upper and lower bounds of the computed H-statistics. Moreover, the results also show that banks revenue are influenced positively by interest expenses, capital adequacy ratio, and the number of branches; and negatively by personnel expenses, other operating expenses, and firm size measured by total assets.     

Testing the Stability of a Production Function with Urbanization as a Shift Factor

Urban economists have long sought to explain the relationship between urbanization levels and output. In this paper we revisit this question and test the long-run stability of a production function including urbanization using non-stationary panel data techniques. Our results show that a long-run relationship between urbanization, output per worker and capital per worker cannot be rejected for either our sample of 30 developing countries or our sample of 22 developed countries. We do find, however, that the sign and magnitude of the impact of urbanization varies considerably across the countries. In addition, we estimate the long-run average effects on GDPW of urbanization and capital. These results offer new insights and potential for dynamic urban models rather than the simple cross-section approach.     

Many ways of qualitative contrast in probabilistic theories of causality

Hitchcock (Synthese 97:335–364, 1993) argues that the ternary probabilistic theory of causality meets two problems due to the problem of disjunctive factors, while arguing that the unanimity probabilistic theory of causality, which is founded on the binary contrast, does not meet them. Hitchcock also argues that only the ternary theory conveys the information about complex relations of causal relevance. In this paper, I show that Eells’ solution (Probabilistic causality, Cambridge University Press, Cambridge, 1991), which is founded on the unanimity theory, meet the two problems. I also show that the unanimity theory too reveals complex relations of causal relevance. I conclude that the two probabilistic theories of causality carve up the same causal structure in two formally different and conceptually consistent ways. Hitchcock’s ternary theory inspires several major philosophers (Maslen, Causation and counterfactuals, pp. 341–357. MIT Press, Cambridge, 2004; Schaffer, Philos Rev 114, 297–328, 2005; Northcott, Phil Stud 139, 111–123, 2007; Hausman, The place of probability in science: In honor of Eelleys Eells (1953–2006), pp. 47–64, Springer, Dordrecht, 2010) who have recently developed the ternary theory or the quaternary theory. This paper leads them to reconsider the relation between the ternary theory and the binary theory.     

Decision making in the beer game and supply chain performance

The beer game has been used to emphasize, investigate, and analyze supply chain inefficiencies as well as the effect of decision makers’ biases. This paper investigates the short- and long-run performance in the beer distribution game by analyzing Sterman’s (Manag Sci 35(3): 321–339, 1989) model that simulates decision-making. In this model, the system may have chaotic behavior depending on the heuristics used by decision makers. We investigate how quickly the system reaches a steady state (if at all). It is known that ignoring supply line (outstanding orders) leads to the bullwhip effect in experimental research. Among other results, we show that the short-term performance of a supply chain is not a predictor of the long-term performance even when decision makers fully recognize outstanding orders. Results of the simulation and practical implications are discussed.     

Investing equally in risk

Classical optimal strategies are notorious for producing remarkably volatile portfolio weights over time when applied with parameters estimated from data. This is predominantly explained by the difficulty to estimate expected returns accurately. In Lindberg (Bernoulli 15:464–474, 2009), a new parameterization of the drift rates was proposed with the aim to circumventing this difficulty, and a continuous time mean–variance optimal portfolio problem was solved. This approach was further developed in Alp and Korn (Decis Econ Finance 34:21–40, 2011a) to a jump-diffusion setting. In the present paper, we solve a different portfolio problem under the market parameterization in Lindberg (Bernoulli 15:464–474, 2009). Here, the admissible investment strategies are given as the amounts of money to be held in each stock and are allowed to be adapted stochastic processes. In the references above, the admissible strategies are the deterministic and bounded fractions of the total wealth. The optimal strategy we derive is not the same as in Lindberg (Bernoulli 15:464–474, 2009), but it can still be viewed as investing equally in each of the n Brownian motions in the model. As a consequence of the problem assumptions, the optimal final wealth can become non-negative. The present portfolio problem is solved also in Alp and Korn (Submitted, 2011b), using the L ²-projection approach of Schweizer (Ann Probab 22:1536–1575, 1995). However, our method of proof is direct and much easier accessible.     

Remittances and economic growth: A study of Guyana

Using an augmented Solow framework and an ARDL bounds test for cointegration, we explore the short- and long-run effects of remittances, aid and financial deepening on growth in Guyana using annual data for the period 1982–2010. The results show that remittances have a positive and significant effect both in the short and the long run. Aid has a negative effect in the long run and financial deepening is not statistically significant. The Granger-causality test reveals that capital stock, aid and financial deepening cause remittances inflow in Guyana.     

Design-based distribution function estimation for stigmatized populations

In this paper, we discuss in a general framework the design-based estimation of population parameters when sensitive data are collected by randomized response techniques. We show in close detail the procedure for estimating the distribution function of a sensitive quantitative variable and how to estimate simultaneously the population prevalence of individuals bearing a stigmatizing attribute and the distribution function for the members belonging to the hidden group. The randomized response devices by Greenberg et al. (J Am Stat Assoc 66:243–250, 1971), Franklin (Commun Stat Theory Methods 18:489–505, 1989), and Singh et al. (Aust NZ J Stat 40:291–297 1998) are here considered as data-gathering tools.     

Unlacing hypercube percolation: a survey

The purpose of this note is twofold. First, we survey the study of the percolation phase transition on the Hamming hypercube $\{0,1\}^{m}$ obtained in the series of papers (Borgs et al. in Random Struct Algorithms 27:137–184, 2005; Borgs et al. in Ann Probab 33:1886–1944, 2005; Borgs et al. in Combinatorica 26:395–410, 2006; van der Hofstad and Nachmias in Hypercube percolation, Preprint 2012). Secondly, we explain how this study can be performed without the use of the so-called “lace expansion” technique. To that aim, we provide a novel simple proof that the triangle condition holds at the critical probability.