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.     

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 nexus between tourism,remittances and growth in Kenya

Recently there has been a surge in remittances inflow to Kenya while tourism receipts appears to be declining, albeit gradually. In light of these developments, the paper explores the plausible effects of tourism and remittances on per worker output. We use the annual data over 1978–2010 periods and the ARDL bounds approach within the augmented (Solow in Q J Econ 70:65–94, 1956) framework. The regression results show that tourism has a marginal net negative effect in the short-run however positive effect in the long-run. Remittances, on the other hand, have a net positive effect in short-run and negative effect in the long-run. The key results from the Toda–Yamamoto Granger non-causality (Toda and Yamamoto in J Econom 66:225–250, 1995) results show a unidirectional causation from remittances to output per worker; and from output per worker to tourism. A unidirectional ‘combined effect’ of all variables causing output and remittances, respectively are evident as well. Conclusively, tourism is one of the leading drivers of Kenyan economy. To boost gains from tourism, the sector needs to align policies to the Kenya 2030 strategic framework with significant focus on expanding markets, boosting investment, and growth. Remittances market need to be further developed strategically with the view to improving Kenyan migrant led growth initiatives with plausible links to tourism development.     

Further evidence on finance-growth causality: A panel data analysis

This paper reassesses the causal relationship between financial development and economic growth. Using recently developed panel methods on a data set of 71 developed and developing countries over the period 1960-2004, our study confirms previous results of a bidirectional causality between finance and growth. In addition, we show significant differences among country groups when considering both long-run and short-run causality. While in low and middle income countries there is no supportive evidence of short-run causality between financial development and economic growth, in high income countries economic growth significantly affects financial development.     

Oil prices and exchange rates in oil-exporting countries: evidence from TAR and M-TAR models

The paper studies the long-run relation and short-run dynamics between real oil prices and real exchange rates in a sample of 13 oil-exporting countries. The purpose of the study is to examine the possibility of Dutch disease in these countries. Tests of cointegration using threshold and momentum-threshold autoregressive (TAR and M-TAR) models suggest the possibility of the disease in 3-out-of 13 countries??Bolivia, Mexico and Norway. For these countries, we also find that (a) oil prices have a long-run effect on the exchange rates; and (b) exchange rates adjust faster to positive deviations from the equilibrium; and (c) there is no evidence of short-run causality between real exchange rates and real oil prices in either direction. Over all, these findings suggest a weak link between oil prices and real exchange rates and thus limited evidence in favor of the Dutch disease.     

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.     

The linkage between insurance activity and banking credit: Some evidence from dynamic analysis

This paper investigates the long-run and short-run linkages between insurance activity and banking credit for G-7 countries. To minimize the pretest bias and overcome the structural changes, we adopt the bootstrap Granger causality test applied to full sample and subsamples with a fixed window size. The Johansen cointegration test with GMM-IV estimator finds a long-run positive relation between the series. The full sample results of bootstrap Granger causality test show that there is predictive power from life insurance activity to banking credit only for France and Japan, while the short-run causal relationships between nonlife insurance activity and banking credit are country-specific. However, parameter stability test results suggest that the short-run results in full sample are unreliable. The results of rolling VAR models report that the causal linkages between them are time-varying across various subsamples. These findings offer some useful insights for achieving the co-evolution between insurance and banking credit markets.     

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.     

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.     

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.     

The relationship between carbon dioxide emissions and economic growth: quantile panel-type analysis

This paper samples the data of 138 countries during the 1971–2007 period, and performs an empirical test to validate the relationship between carbon dioxide emissions and economic growth. It first performs panel data analysis and quantile regression analysis to estimate the long-run elasticity relationships, and then analyzes the short-run error correction model to verify the causal relationship between the two. The empirical results indicate the following. (1) The long-run relationship between global carbon dioxide emissions and GDP is stable, with 32.6% of the sampled countries showing cross-coupling of the two (with an elasticity value of greater than 1), 47.1% reporting relative-decoupling (with an elasticity value between 0 and 1), and 20.3% seeing absolute-decoupling (with an elasticity value of smaller than 0). (2) The quantile regression shows that long-run elasticity declines along with the rise of carbon dioxide emission quantiles. In other words, cross-coupling turns into relative-decoupling. (3) The analysis of short-run panel data and quantile regressions mostly support the feedback relationship between carbon dioxide emissions growth and economic growth. This is consistent with the hypothesis developed by Kuznets. (4) According to the results of the quantile regression, the higher the quantiles, the faster and more stable of the short-run error-correction mechanism of the adjustments from short-run disequilibrium to long-run equilibrium. (5) Under the low-quantile carbon dioxide emissions growth and economic growth, the relationship between these two is not stable of the short-run disequilibrium adjustments in the error-correction adjustment process. However, the relationship between these two is steady and feedback in the case of high quantiles. Therefore, the first priority to combat global warming is to focus on the countries with high economic growth and high carbon dioxide emissions growth.     

我国财政与经济增长关系:基于Bootstrap仿真方法的实证检验

不同经济体的财政与经济增长作用关系存在差异性,研究文献对二者理论关系的认识也并不统一。本文采用小样本可靠的Bootstrap仿真方法,利用1952~2003年为样本期的时序数据,对我国政府支出与经济增长进行了Granger因果关系的实证检验。比较研究显示,基于渐近理论的传统检验结果认为,二者不存在统计上的协整关系。利用Bootstrap仿真方法却得到不同的结论,即政府支出与经济增长具有双向的Granger因果关系,意味着我国财政和经济增长存在相互促进作用。本文结论与大多数研究文献观点存在显著区别。     

Energy consumption, CO2 emissions, and economic growth: evidence from Indonesia

Energy policy-makers in Indonesia are interested in the causal relationship between energy consumption, CO₂ emissions, and economic growth. Therefore, this paper attempts to analyze the short- and long-run causality issues between energy consumption, CO₂ emissions, and economic growth in Indonesia using time-series techniques. To this end, annual data covering the period 1965–2006 are employed and tests for unit roots, co-integration, and Granger-causality based on an error-correction model are applied. The results show that there is a bi-directional causality between energy consumption and CO₂ emissions. This means that an increase in energy consumption directly affects CO₂ emissions and that CO₂ emissions also stimulate further energy consumption. In addition, the results support the occurrence of uni-directional causality running from economic growth to energy consumption and to CO₂ emissions without any feedback effects. Thus, energy conservation and/or CO₂ emissions reduction policies can be initiated without the consequent destructive economic side effects.     

The J-Curve at industry level: Evidence from Sweden–US trade

Previous research that investigated the impact of real depreciation of kronor on Swedish trade balance used trade data either between Sweden and the rest of the world or between Sweden and each of her trading partners. Not much support was provided for a significant effect, especially in the case of Swedish–US trade. In this paper we consider the trade flows between Sweden and the US one more time and try to disaggregate the data by industry. We consider the trade balance of each of the 87 industries that trade between the two countries and investigate the short-run and the long-run effects of real depreciation of kronor on each industry's trade balance. While we find short-run significant effects in the majority of the industries, the short-run effects last into the long-run favorable effects only in 23 of 87 industries.     

Technological Change and Transition: Relative Contributions to Worldwide Growth During the 1990s*

In this paper we use the Kumar and Russell [American Economic Review (2002) Vol. 92, pp. 527–548] growth‐accounting procedure to examine cross‐country growth during the 1990s. Using a data set comprising developed, newly industrialized, developing and transitional economies, we decompose the growth of output per worker into components attributable to technological catch‐up, technological change and capital accumulation. In contrast to the study by Kumar and Russell, which concludes that capital deepening is the major force of growth and change in the world income per worker distribution over the 1965–90 period, our analysis shows that, during the 1990s, the major force in the further divergence of the rich and the poor is due to technological change, whereas capital accumulation plays a lesser and opposite role. Finally, although on average we find that transitional economies perform similar to the rest of the world, the procedure is able to discover some interesting patterns within the set of transitional countries.     

Temporal causality between house prices and output in the US: A bootstrap rolling-window approach

This paper examines the causal relationships between the real house price index and real GDP per capita in the US, using the bootstrap Granger (temporal) non-causality test and a fixed-size rolling-window estimation approach. We use quarterly time-series data on the real house price index and real GDP per capita, covering the period 1963:Q1 to 2012:Q2. The full-sample bootstrap non-Granger causality test result suggests the existence of a unidirectional causality running from the real house price index to real GDP per capita. A wide variety of tests of parameter constancy used to examine the stability of the estimated vector autoregressive models indicate short- and long-run instability. This suggests that we cannot rely on the full-sample causality tests and, hence, this warrants a time-varying (bootstrap) rolling-window approach to examine the causal relationship between these two variables. Using a rolling window size of 28 quarters, we find that while causality from the real house price to real GDP per capita occurs frequently, significant, but less frequent, evidence of real GDP per capita causing the real house price also occurs. These results imply that while the real house price leads real GDP per capita, in general (both during expansions and recessions), significant feedbacks also exist from real GDP per capita to the real house price.     

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.     

Re-opening after the lockdown: Long-run aggregate and distributional consequences of COVID-19

Covid-19 has dealt a devastating blow to productivity and economic growth. We employ a general equilibrium framework with heterogeneous agents to identify the tradeoffs involved in restoring the economy to its pre-Covid-19 state. Several tradeoffs, both over time, and between key economic variables, are identified, with the feasible speed of successful re-opening being constrained by the transmission of the infection. In particular, while more rapid opening up of the economy will reduce short-run aggregate output losses, it will cause larger long-run output losses, which potentially may be quite substantial if the opening is overly rapid and the virus is not eradicated. More rapid opening of the economy mitigates the increases in both long-run wealth and income inequality, thus highlighting a direct conflict between the adverse effects on aggregate output and its distributional consequences.     

Growth, development and natural resources: New evidence using a heterogeneous panel analysis

This paper explores whether natural resource abundance is a curse or a blessing. To do so, we firstly develop a theory consistent econometric model, in which we show that there is a long run relationship between real income, the investment rate, and the real value of oil production. Secondly, we investigate the long-run (level) impacts of natural resource abundance on domestic output as well as the short-run (growth) effects. Thirdly, we explicitly recognize that there is a substantial cross-sectional dependence and cross-country heterogeneity in our sample, which covers 53 oil exporting and importing countries with very different historical and institutional backgrounds, and adopt the non-stationary panel methodologies developed by Pesaran (2006) and Pedroni (2000) for estimation. Our results, using the real value of oil production, rent or reserves as a proxy for resource endowment, reveal that oil abundance has a positive effect on both income levels and economic growth. While we accept that oil rich countries could benefit more from their natural wealth by adopting growth and welfare enhancing policies and institutions, we challenge the common view that oil abundance affects economic growth negatively.     

Adaptive learning and monetary exchange

This paper investigates three classic questions in monetary theory: How can an intrinsically worthless asset, such as fiat money, maintain value as a medium of exchange? What are the short-run and long-run effects of a change in the money supply? What is the social cost of inflation? I answer these questions using a microfounded model of monetary exchange that replaces the rational expectations assumption with an adaptive learning rule. First, I show that monetary exchange is a robust arrangement in the sense that agents are able to learn the stationary monetary equilibrium while the non-monetary equilibrium is unstable under learning. Second, an unanticipated monetary injection has real effects in the short-run because learning the value of money takes time. In the long run, agents successfully learn the value of money, hence money is neutral. Third, under a constant money growth policy, an increase in the growth rate of money increases output in the short-run producing a short-run Phillips curve. A ten percent increase in the money growth rate has a social cost of 0.41 percent of output per year. Alternatively, a ten percent decrease in the money growth rate has a social benefit of 0.37 percent of output per year.