Does income inequality lead to banking crises in developing countries? Empirical evidence from cross-country panel data

This study empirically examines whether increasing income inequality results in banking crises using panel data for 68 countries covering the years 1973 to 2010. The results show that developing countries with high inequality tend to have higher levels of domestic credit and that domestic credit booms increase the probability of banking crises. We also find that developing economies display direct channels from inequality to banking crises without an association with credit booms. We find no consistent evidence that income inequality contributes to banking crises in advanced economies. In developing countries, the probability of banking crises increases dramatically as income inequality levels increase: The probability of a systemic banking crisis within three years is 9.5% when the Gini is as low as 0.2 in developing countries and increases to 57.4% when the Gini is 0.4. These results are robust to several specifications.     

Public infrastructure provision and skilled–unskilled wage inequality in developing countries

In this paper, we develop several static three-sector general equilibrium models with diverse labor market structures to investigate the effects of government provision of public infrastructure on the skilled–unskilled wage inequality in developing countries. The basic full employment model shows that the production sectors' relative dependence on the public infrastructure provision plays a crucial role in determining the skilled–unskilled wage inequality. Different relative dependences on public infrastructure may even result in opposite changes in the skilled–unskilled wage inequality. The above results are robust even when we extend the basic full employment model to three fundamentally different cases.     

Challenges and prospects of HRM in developing countries: testing the HRM–performance link in the Eritrean civil service

In this article, the authors examine how, when and to what extent HR practices affect performance at the employee level. As performance is a multi-faceted and complicated concept, HRM outcomes were used as mediating factors between HR practices and employee performance. The data were collected among civil servants in Eritrea, Africa's youngest and poorest country. Although the results generally are in line with previous studies using Western data, their implications in this particular country may be different. Therefore, the challenges and prospects of HR practices in Eritrean civil service organizations are critically analysed and discussed. In the authors' opinion, that the Eritrean economic and political environment within which HR practices operate has not been conducive in maximizing the impact of HR practices on performance. These findings highlight the situation of most developing countries.     

On the location of knowledge-intensive entrepreneurship in developing countries: lessons from São Paulo,Brazil

This article empirically appraises the geographical distribution of knowledge-intensive entrepreneurship (KIE) in the settings of an emerging economy. We start from the typical agglomeration approach and then introduce a set of variables related to local market conditions, distance from the economic hub, and knowledge & innovation system to explain KIE location and density on the basis of city-level data in the State of São Paulo, Brazil. Findings indicate KIE concentration in and around a few urban areas, providing support to agglomeration economies concepts. There is strong evidence that the local presence of research-oriented universities, access to capital, and business concentration are correlated to KIE emergence and density. Results also indicate the moderating effect of agglomeration diseconomies mainly related to factors of rapid and anarchic expansion of urban centers and the consequences of extreme inequalities in income distribution. This challenges the usability of concepts of entrepreneurial ecosystems from advanced economies if not adapted to the realities of developing countries.     

The relation between the equity risk premium and the bond maturity premium in the UK: 1900–2006

Using a rich data set for the UK for over a century, we find that the relation between the equity risk premium and the government bond maturity premium is nonlinear and subject to stochastic regime switching. We identify a regime in which both premia are jointly characterized by low volatility and another regime in which both premia are characterized by high volatility. The occurrence of the high volatility regime chronologically coincides with major changes in the pound exchange rate. The low volatility regime has a higher probability of turning up over two consecutive years than the high volatility regime, but it is not perceived by investors to be an absorbing regime. The lagged maturity premium is a strong predictor of the equity risk premium only in the regime of low volatility. In addition, the lagged equity premium is a predictor of the maturity premium also in the low volatility regime. This result on regime-dependent bidirectional predictability is robust to alternative definitions of the equity premium, and to the inclusion of real interest rate and real growth effects.

Growth and government: Is there a difference between developed and developing countries?

I examine the role of government in the growth of 64 industrialized and developing countries, considering both expenditure and financing aspects of government. Recognizing that there may be differences between the two country groups, I estimate both standard OLS and dummy variable regressions. The general conclusion is that although most fiscal variables are not significantly related to economic growth, the means of financing matters more than government spending. I find that seigniorage and the budget surplus are important for growth, but the LDCs is the group that drive the results in all regressions.     

Health and economic growth in high-income countries revisited: evidence from an augmented production function for the period 1980–2009

This paper uses time series data for seven industrialized countries from 1980–2009 to explore the causality between health care expenditure (HCE) and economic growth. We have set up a classical Cobb–Douglas production function including HCE, labor, capital, and an augmented function additionally including the number of patent applications (as a proxy for technology and research) and the total number of tertiary education students (as a proxy for education). Our results show that there is a long-run relationship between growth and HCE. As regards causality, in the classical production function, evidence for mutual causality between GDP and HCE is noted only in France, Germany and England, causality from HCE to GDP is noted in Italy and Japan, while no causality whatsoever is evidenced in Canada and USA. However, a completely different situation is unveiled when the augmented production function is used with mutual causality being noted in all perused variables. The novelty of our study lies first in that it contributes to the health-growth nexus literature for high-income countries which has been quite controversial and second it sets off new variables whose omission might be one of the reasons of the result dichotomy. Results of this study will be very useful for high-income countries currently afflicted by the economic crisis and embark on HCE curtailments or revisions.     

Stock returns and real activity in the G-7 countries: did the relationship change during the 1980s?

Several empirical studies show that a substantial fraction of the changes in growth rates of real activity can be explained by lagged aggregate stock return variations in the U.S. as well as in other G-7 countries from the 1950s to the 1990s. However, the results presented in Binswanger.[International Review of Economics and Finance 9 (2000) 387] indicate that this traditionally strong relation has disappeared in the U.S. in the early 1980s. This paper shows that a similar breakdown occurred in Canada, Japan and in an aggregate economy consisting of the four European G-7 countries. The results provide evidence in favor of the hypothesis that speculative bubbles during the 1980s and 1990s were an international phenomenon.     

Whose constituency? Representativeness of the Finnish Paper Workers' Union,innovation strategies,and outsourcing in the Finnish paper industry between 1980 and 2008

Outsourcing has been a conflictual issue in the Finnish paper industry, which reached a temporary solution in 2005. This article analyses the Paper Workers' Union's stance on outsourcing, arguing that it has been defending acquired rights and perhaps deliberately narrowed its representation of diverse constituencies over time.     

On the linearity of the wage–profit relation in a Sraffa’s model: a mathematical summing-up

This paper sums up in a common analytical structure the main results, scattered in economic literature, concerning the linearity between rate of profit and real wage in a simple Sraffa’s model. The paper is mainly based on previous results of one of the two authors and on results of Miyao (Int Econ Rev 18:151–162, 1977) and Schefold (Zeitschrift für angewandte Mathematik und Physik 27:873–875, 1976a; Zeitschrift für National?konomie 36:21–48, 1976b).     

How does the economic policy uncertainty affect the relationship between financial slack and firm performance in emerging countries?

This study investigates the moderating effect of economic policy uncertainty (EPU) on the relationship between slack resources and firm performance in emerging countries. By using 47,523 firm-year observations from seven emerging market economies through the period of 2010–2018, the results show an inverse U-shaped relationship between slack resources and firm performance. The findings also demonstrate that EPU acts as a negative moderator for the slack–performance relationship. In high EPU environments, the marginal benefit from one additional unit of slack is smaller relative to low EPU environments. This study contributes to the slack resources-firm performance literature by emphasizing the role of the broader external environment as a moderator.     

The risk–return relation in the corporate loan market

This paper analyzes the hypothesis that returns play a risk-compensating role in the market for corporate revolving lines of credit. Specifically, we test whether borrower risk and the expected return on these debt instruments are positively related. Our main findings support this prediction, in contrast to the only previous work that examined this problem two decades ago. Nevertheless, we find evidence of mispricing regarding the risk of deteriorating firms using their facilities more intensively and during the subprime crisis.     

Relationship between the Mean and the Constant in a Box–Jenkins Time Series Model

In some publications the mean is identified with the constant of a Box–Jenkins time series model. In this paper the relation between both terms is demonstrated. Furthermore, by means of an example, the errors which may be made if one does not use each term adequately are shown.     

All in a day's work? Career self‐management and the management of the boundary between work and non‐work

This article reports the findings of a study that explored the links between career self‐management, management of the boundary between work and non‐work, and work–life balance, using a sample of young professionals. The findings show that individuals engage in different kinds of career self‐management behaviours, depending on their career goal. Management of the boundary between work and life outside work is identified as one such behaviour, with the consequence that, for some people, managing the career has a harmful effect on their work–life balance. The research adds to knowledge about the career self‐management process and shows how career stage influences career goals and career self‐management behaviour. It demonstrates how career attitudes and behaviours may be critical to the achievement of work–life balance and confirms that work–life balance matters to younger members of the workforce, regardless of their family responsibilities.     

The time-varying correlation between output and prices in the United States over the period 1800–2014

In this study, we examine the time-varying correlations between output and prices, while controlling for the impact of the monetary policy stance and output and inflation uncertainties over the period 1800–2014. The results of the empirical analysis reveal that the dynamic correlations of output and prices were typically negative, suggesting a countercyclical behaviour of prices, apart from the early 1840s and from the beginning until the middle of the 20th century, when the correlation was positive, indicating a procyclicality of prices. A historical decomposition analysis based on a sign-restricted structural vector autoregressive model is able to relate the procyclical and countercyclical behaviour to the predominance of aggregate supply and aggregate demand and/or monetary policy shocks, respectively. Moreover, inflation uncertainty (monetary policy stance) was found to have a positive (negative) effect on inflation over the last 215 years.     

A tale of two crises: Federal transfers and regional economies in Russia in 2009 and 2014–2015

We examine transfers from Russia’s federal government to the regions during the two recent economic crises. We show that while federal transfers in 2009 were large and targeted poorer regions, the 2014–2015 transfers were much smaller and not targeted. This policy shift was accompanied by a relatively greater decline in own revenues in the poorer regions and their worse economic performance overall. As a result, interregional budget expenditure inequality in Russia was significantly higher in 2014–2015 than it had been for years. This is important because regional budgets are responsible for a large share of investments, housing, education and healthcare.     

The banking industry after the Riegle–Neal Act: re-structure and overall performance

The passage of the Riegle–Neal Interstate Banking and Branching Efficiency Act (IBBEA) of 1994 allowed bank holding companies to acquire banks in any state after September 30, 1995. We examine the impact of the legislation on the performance of the banking industry by comparing performance measures of banks with their pre-IBBEA levels. We find that the performance improved in the post-IBBEA period but when controlled for general economic conditions and interest rate movements, the impact of IBBEA on bank performance appears insignificant.     

Dynamics,stability, and foresight in the Shapley–Scarf housing market

While most of the literature starting with Shapley and Scarf (1974) have considered a static exchange economy with indivisibilities, this paper studies the dynamics of such an economy. We find that both the dynamics generated by competitive equilibrium and the one generated by the weak dominance relation, converge to a set of allocations we define as strictly stable, which we can show to exist. Moreover, we show that even when only pairwise exchanges between two traders are allowed, the strictly stable allocations are attained eventually if traders are sufficiently farsighted.     

Does entrepreneurial activity matter for economic growth in developing countries? The role of the institutional environment

The discussion on which institutions determine entrepreneurial activity – and the role of institutions in the aggregated output for developing countries – is as yet unresolved. The extant literature about entrepreneurship recognizes new ventures as potential mechanisms for long-term development. Yet, there is a consensus on the lack of evidence, particularly for these countries. Drawing on institutional economics, this article explores the interrelationships among institutional environment, entrepreneurial activity, and economic growth. To this end, we use simultaneous-equation panel data models for a sample of 14 developing countries (78 observations) over the period of 2004–2012. The main findings suggest a causal chain running from institutions to opportunity entrepreneurship, which is linked to the economic growth of emerging economies. In particular, we find that institutional factors – such as the number of procedures to start a new business, private credit coverage ,, and access to communication– influence entrepreneurial activity driven by opportunity. Policy implications for developing countries could be derived in order to enhance their economic performance through entrepreneurial activity.