Does economic uncertainty affect the soundness of banks? Evidence from emerging Asian economies

This paper examines the impact of economic uncertainty on four dimensions of banking soundness, namely, banks’ loan growth rates, interest rate spreads, capitalization and risk. By using the bank-level panel data of approximately 500 commercial banks in seven emerging Asian economies, we find consistent evidence that increased economic uncertainty decelerates banks’ loan growth, narrows their interest rate spreads and aggravates their risk, but induces banks to increase their capital holdings. Our results are shown to be robust in a series of checks that use alternative indicators of economic uncertainty and econometric methodologies.     

Does religious beliefs affect economic growth? Evidence from provincial-level panel data in China

More and more literature on economic growth and development has increasingly focused on long-run effects of geographic, historical, and cultural factors on productivity and income per capita. This paper investigates the effect of religious beliefs on economic growth using provincial panel data from 2001 to 2011 in China. It's very meaningful to study the role of religion playing in economic development since religion has influence on political preference, human capital and work ethic, especially in current China which is faced with income disparity, environmental pollution, and official corruption. Our results reveal that, among the different religions, Christianity has the most significant effect on economic growth. This conclusion is consistent among different estimators and robust with stability over time. However, no consistent or robust conclusions can be drawn for other religions. Different estimation methods give different signs or significance. Given the very few studies and limited data resources about China in this field, the paper as a tentative study provides a brand new viewpoint.     

Does inequality in health impede economic growth?

This paper investigates the effects of inequality in health on economic growth in low and middle income countries. The empirical part of the paper uses an original cross-national panel data set covering 62 low and middle income countries over the period 1985 to 2007. I find a substantial and relatively robust negative effect of health inequality on income levels and income growth controlling for life expectancy, country and time fixed-effects and a large number of other effects that have been shown to matter for growth. The effect also holds if health inequality is instrumented to circumvent a potential problem of reverse causality. Hence, reducing inequality in the access to health care and to health-related information can make a substantial contribution to economic growth.     

Does economic growth affect urbanization? New evidence from China and the Chinese National Congress

Using a panel of Chinese provinces during 1985–2008, we propose an estimation strategy to study the within-province effect that per capita GDP growth may have on the urbanization rate. Our approach exploits the timing of the National Congress of the Communist Party, which is a 5-yearly meeting where national economic policies are debated. Because economic growth is a key policy objective and given that the Chinese fiscal system is highly decentralized, the recurring National Congress may encourage a systematic pattern of spending by provincial governments to foster growth. We find that per capita GDP growth is associated with the timing of the National Congress, and exploiting instrumental variables that convey this timing information, we also find that growth has a statistically significant effect on the urbanization rate.     

Does the internet generate economic growth,international trade,or both?

Recent cross country panel data studies find a positive impact of internet use on economic growth and a positive impact of internet use on trade. The present study challenges the first finding by showing that internet use does not explain economic growth directly in a fully specified growth model. In particular openness to international trade variables seem to be highly correlated with internet use and the findings in the literature that internet use causes trade is confirmed here suggesting that internet use impacts trade and that trade impacts economic growth. A simultaneous equations model confirms the positive and significant role of internet use to openness and the importance of openness to economic growth. Internet use shows to be more impacting trade in non-high income countries than in high income countries whereas the impact of trade on economic growth is the same for both income groups.     

Has urbanization accelerated PM2.5 emissions? An empirical analysis with cross-country data

As a prominent indicator of economic development, urbanization can exert a significant impact on the PM_2.5 level. Using panel data from 126 countries (areas) over the period 1990–2016, this study investigates the relationship between urbanization level and PM_2.5 density. A modified stochastic impacts by regression on population, affluence, and technology model is applied as the empirical strategy. Results show that the relationship between urbanization and PM_2.5 density has an inverted U shape. The effects of urban agglomeration and technological progress reduce the density of PM_2.5 in the late stage of urbanization. This study can help policymakers design appropriate measures relevant to PM_2.5 attenuation in the context of breakneck urbanization.     

How does GVC reconstruction affect economic growth and employment? Analysis of USA–China decoupling

The state of USA–China relations has become increasingly strained. The term ‘decoupling’ has been frequently used within the narrative of USA–China relations to describe the possible outcome of the relationship. A ‘decoupling’ of the USA and Chinese economies would trigger the restructuring of existing Global Value Chains (GVCs). Given this possibility, we use the 2014 World Input–Output Database (WIOD) and the hypothesis extraction method to simulate several scenarios of GVC reconstruction on economic growth and employment. From the analysis, we find that: (1) GVC reconstructions caused by USA–China decoupling would have a greater impact on China than on the USA. If USA–China bilateral trade is replaced by the surrounding economies, China's GDP and employment would fall by 2.57% and 2.34%, respectively. (2) The effects on regional economies are synergistic, with the countries directly surrounding China and the USA being more affected than India and most European countries. (3) USA manufacturing may benefit from the manufacturing repatriation policy, but the overall impact on economic growth would be limited. (4) In all reconstruction scenarios, global GDP figures are lower than they are today, demonstrating the importance of maintaining existing GVCs.     

Does income affect fertility or does fertility affect income?

"This paper tests for the dynamic causal connection between real income per capita and the birth rate for a subset of developing countries. These countries are Costa Rica, El Salvador, Guatemala, Mexico, and Uruguay. Our empirical findings show that, for the historical period under review, in several countries real income per capita affected the birth rate. Virtually no evidence is found to support the hypothesis that the birth rate affected real income per capita."     

Does government intervention affect banking globalization?

Using data from British and American banks, we provide empirical evidence that government intervention affects the global activities of individual banks along three dimensions: depth, breadth and persistence. We examine depth by studying whether a bank's preference for domestic, as opposed to external, lending (funding) changes when it is subjected to a large public intervention, such as bank nationalization. Our results suggest that, following nationalization, non-British banks allocate their lending away from the UK and increase their external funding. Second, we find that nationalized banks from the same country tend to have portfolios of foreign assets that are spread across countries in a way that is far more similar than those of either private banks from the same country or nationalized banks from different countries, consistent with an impact on the breadth of globalization. Third, we study the Troubled Asset Relief Program (TARP) to examine the persistence of the effect of large government interventions. We find weak evidence that upon entry into the TARP, foreign lending declines but domestic does not. This effect is observable at the aggregate level, and seems to disappear upon TARP exit. Collectively, this evidence suggests that large government interventions affect the depth and breadth of banking globalization, but may not persist after public interventions are unwound.     

Public debt and economic growth – economic systems matter

Most studies on the relationship between public debt and economic growth implicitly assume homogeneous debt effects across their samples. We –in accordance with recent literature– challenge this view and state that there likely is a great deal of cross-country heterogeneity in that relationship. However, other than scholars assuming that all countries are different, we expect that clusters of countries differ. We identify three country clusters with distinct economic systems: Liberal (Anglo Saxon), Continental (Core EU members) and Nordic (Scandinavian). We argue that different degrees of fiscal uncertainty at comparable levels of public debt between those economic systems constitute a major source of heterogeneity in the debt-growth relationship. Our empirical evidence supports this assumption. Continental countries face more growth reducing public debt effects than especially Liberal countries. There, public debt apparently exerts neutral or even positive growth effects, while for Nordic countries a non-linear relationship is discovered, with negative debt effects kicking in at public debt values of around 60% of GDP.     

How do changes in household economic conditions affect cognitive function?

This study examines the effects of changes in household economic conditions on cognitive function using individual panel data from the National Survey of the Japanese Elderly. This study captures the objective and subjective economic conditions and examines which aspects of economic conditions affect cognitive function. The results demonstrate that deterioration in economic conditions damages cognitive function. In particular, objective economic conditions measured by income affect the cognitive function of Japanese men. This study also assesses possible pathways through which economic conditions affect cognitive function.     

Government activity and economic growth – one size fits All?

This study investigates the role of government activity in economic growth, arguing that economic systems are important and that, therefore, one size of government does not fit all countries. Taking a panel of 111 countries over the years from 1971 to 2010, we consider clusters of economic systems as predicted by an extended Varieties of Capitalism (VoC) approach. The empirical growth impact of government activity is positive but u-shaped and depends on both the quality of institutions and the institutional setting. For the polar cases of liberal economies and Scandinavian coordinated market economies, the potential growth impact is quite similar and superior to other clusters of countries. However, the maximum growth effect is realized for above-average levels of government activity in the Scandinavian countries, while this would be detrimental to growth in liberal countries. Hence, high levels of government activity are consistent with growth but only in economic systems consistently rooted in a high level of government activity.     

Does foreign direct investment cause long run economic growth? Evidence from the Latin American and the Caribbean countries

The empirical evidence about the temporal precedence between foreign direct investment (FDI) and economic growth in open developing economies is mixed. In this research effort, we explored the FDI-growth nexus for 16 developing countries of Latin American and the Caribbean countries during the last three decades, a period in which many of these countries introduced various economic and financial reforms. As a departure from many previous studies, the current analysis uses the Granger noncausality test procedure recently developed by Toda and Yamamoto (J Econ 66:225–250, 1995), and Dolado and Lutkepohl (Econ Rev 15:369–386, 1996)–TYDL. Our results suggest that the null hypothesis that ‘FDI does not Granger cause economic growth’ is rejected for all countries except Dominican Republic, Trinidad and Tobago, and Jamaica. There is also evidence of unidirectional causality from growth to FDI for all countries except Bolivia, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, and Jamaica. We found bidirectional causality for Argentina, Brazil, Mexico, Peru and Venezuela.     

Colonial immigrant literacy: An economic analysis of Pennsylvania-German evidence, 1727–1775

The literacy of over 23,000 immigrants is compared to the literacy of established American and European populations to assess the contribution of immigrants to the general superiority of colonial literacy vis-à-vis the rest of Europe. The nature of the positive self-selection of literate individuals into the transatlantic migration stream is explored using regression techniques and generation-specific controls. The estimated changes in the propensity of literates to migrate over the life cycle are explained by the changing nature of investment in general versus specific human capital over the life cycle.     

The impact of innovation on export behavior： An empirical analysis of Lao garment firms

Research on the role of innovation as important factor for creating and maintaining competitiveness of nations and firms has long been popularized among scholars and policy makers. The impact of innovation on exporting has been investigated in many countries. However, this issue has paucity of research in the Lao PDR. This study empirically investigates whether or not innovation performed by Lao garment firms determines their exporting behaviors. Utilizing the Probit and Tobit regression to analyze the data from the recent survey of industrial cluster development of Lao garment industry in 2007, the empirical results show that innovation as measured directly by “new product” and “new production process” have positive impact not only on export probability but also export intensity in the case of Lao garment firms. This implies that Lao garment finns who become the innovators have high probability to be exporters. Moreover, among exporters who are innovators outperform non-innovators in terms of export intensity. In addition, this study also finds that Lao garment exporters enjoy more competitive advantage due to lower labor cost. The findings from this study have important policy implications regarding how the government can support Lao garment firms to be innovators in order to sustain export performance.     

Does gender structure affect firm productivity? Evidence from China

This study examines the impact of gender workforce composition on firm productivity. Using a large sample of Chinese manufacturing firms and conditional on human capital-related controls, we find that firms with a greater share of female workers demonstrate lower productivity. However, our results suggest that increasing the fraction of highly educated female workers significantly improves firm performance. This effect is evident for all private firms regardless of their trade orientation and foreign firms undertaking purely domestic sales. However, the effect does not exist in the case of state-owned and export-oriented foreign enterprises. Compared with medium-sized and large firms, small firms benefit more from gender diversity at high education level. Finally, the share of highly talented female workers indicates better firm performance in more feminized industries.     

Why has economic growth slowed down in Indonesia? An investigation into the Indonesian business cycle using an estimated DSGE model

Economic growth in Indonesia has been trending down from about 6.5% in 2010 to less than 5% recently. Calibrating and estimating a dynamic stochastic general equilibrium (DSGE) model of Indonesia, we show that most of Indonesia’s growth over the last decade has been driven by supply factors, especially rising multi-factor productivity (MFP) as Indonesia reaped the benefits of post-Asian-crisis structural reforms. The pace of multi-factor productivity growth has slowed since 2010, however, a decelerating trend reinforced by slower world growth. A series of interest rate cuts has successfully managed to offset some of those headwinds. However, absent further structural reforms to revive productivity growth, supportive monetary policy will not be sufficient to sustain long-term growth and poses inflation risks.