Fundamentals and Oil Price Behaviour: New Evidence from Co‐integration Tests with Structural Breaks and Granger Causality Tests

As the world economy has undergone various changes and shocks, the oil market went through significant fluctuations during the period 1994–2015. This study focuses on discussing the possible factors that determine crude oil prices, which include world economic growth, market power of Organization of the Petroleum Exporting Countries (OPEC), non‐OPEC supply and the value of dollar, taking into account the structural changes that influence the study period, which is quarterly data for the period of 1994.Q1–2015.Q3. For time series stationarity tests, Zivot and Andrews (1992) and Perron (1997) unit root test with structural break is used. To test the existence of a long relationship in the presence of structural changes, the Gregory and Hansen (1996a, 1996b) method of co‐integration is used. For long‐run coefficient, we proceed to estimate fully modified least squares. The result shows a significant influence of non‐OPEC supply, the dollar appreciation and world gross domestic product growth, but OPEC did not have a significant effect on the price of oil, which is indicated by the structural break for OPEC capacity utilisation at 2002.Q1, that indicates the starting point of the loss of OPEC power. Establishing the presence of co‐integration, we apply the evaluation of Granger causality for co‐integrated data, using vector error‐correction model.     

Duopoly Competition with Corporate Social Responsibility

This paper highlights the effect of firms’ position on firms’ strategies with corporate social responsibility (CSR) practices under three different cases: Cournot competition; Stackelberg competition with the CSR firm taking the leader position and turnover, with the profit maximising (PM) firm playing as the leader. Some interesting conclusions are achieved. First, the CSR firm always produces more than the PM firm. Second, the outputs of both firms (the consumer surplus) under the PM firm's leading position are larger than those under Cournot. Third, the profits of both firms (producer surplus) under the PM firm playing the leading position are less than those under Cournot. Surprisingly, when the PM firm first moves, the PM firm's profits are the lowest while the CSR firm's outputs are the highest in all three cases. Finally, the relationship of social welfare under the three cases is ambiguous.     

SOCIAL SECURITY DEPENDENT BENEFITS,NET PAYROLL TAX,AND MARRIED WOMEN'S LABOR SUPPLY

This paper examines how Social Security dependent benefits impact the labor supply of married women aged 25–54. Specifically, I investigate whether the decrease in the rate of return to women's work discourages them from participating in the labor force by simulating expected net payroll tax rates and dependent benefits. Dependent benefits may reduce the net return to women's work, as they usually pay the full payroll tax without receiving marginal benefits for additional earnings if they claim benefits based on their husbands' earnings records. The results show that high net payroll tax rates reduce married women's work incentives, particularly those near retirement age. (JEL H24, H55, J22)     

HEALTH INSURANCE,FERTILITY, AND THE WANTEDNESS OF PREGNANCIES: EVIDENCE FROM MASSACHUSETTS

Health insurance reform in Massachusetts lowered the cost of both pregnancy (by increased coverage of pregnancy‐related medical events) and pregnancy prevention (by increasing access to reliable contraception). We empirically examine fertility responses and find no overall effect from increased coverage due to the Massachusetts reform. This finding, however, masks substantial heterogeneity. For married women aged 20 to 34—with high latent fertility and pregnancy wantedness—fertility increased by approximately 1%. For unmarried women in the same age range—for whom pregnancies are typically unwanted—fertility declined by 8%. (JEL I13, I18, J13)     

Fiscal Stimulus and Endogenous Firm Entry in a Monopolistic Competition Macroeconomic Model

This paper sets up a monopolistic competition model featuring the returns to production specialization. Some novel results are derived from the analysis. First, the effect of a fiscal stimulus on consumption may be positive or negative, depending crucially upon whether the production function is characterized by increasing or decreasing returns to production specialization. Second, following a fiscal expansion, increasing returns to specialization lead to a positive linkage between real wages and aggregate output, while decreasing returns to specialization result in a negative relationship between real wages and aggregate output. Third, a fiscal expansion may raise social welfare, provided that the degree of increasing returns to production specialization is sufficiently large.     

Comparison of Important Laws Governing the Macroeconomies of Taiwan and China

This is a comparative study of the important laws governing the macroeconomies of Taiwan and China. The laws are concerned with consumption, investment and fiscal and monetary policies of the government. Following similar studies on China, the present paper focuses on the case of Taiwan. Using annual data from 1961 to 2014 we find that the consumption function satisfies the permanent income hypothesis of Friedman and the investment function satisfies the accelerations principle as in the case of China. Money supply does not affect GDP but government expenditure has a positive effect on consumption and a negative effect on investment. These results are opposite to those obtained for China. Explanations of the differences are given.     

Occupational Segregation and Gender Wage Differentials: Evidence from Malaysia

In Malaysia, the participation of women in the labor market has increased over time. However, occupational segregation and wage differentials continue to be prevalent between men and women in the labor market. The present paper investigates gender‐related occupational segregation and wage differentials based on data collected from 7135 working households in Peninsular Malaysia in 2011. The wage decomposition model introduced by Brown et al. (1980) is used to examine the determinants of gender‐related wage differentials. The results suggest that differences within occupations account for the largest portion of the wage gap between men and women. The results also indicate that wage discrimination within occupations plays an important role in the gender wage gap, while sample selection bias plays an important role in the examination of gender wage gaps.     

ON THE IMPACT OF PUBLIC DEBT ON ECONOMIC GROWTH: DOES COUNTRY RISK MATTER?

This study examines the nonlinear impacts of four country risk indices on the debt‐growth nexus for 61 countries in a panel data framework. Our results show evidence of the different debt‐growth nexus under the different degrees of country risk. Under a high‐risk environment, a country's economic growth is harmed by raising its public debt. The negative effects public debt has on economic growth become weak under low political and financial‐risk environments, while an increase in public debt could help to stimulate economic growth under low composite and economic risk environments. In addition, the differences of countries' income and debt levels also lead country risks to have different effects on the debt‐growth nexus, suggesting that a country should borrow appropriately based on its current risk environments while improving economic performance. (JEL C33, E02, H63, O43)     

Voluntary Contributions to a Mutual Insurance Pool

We study mutual‐aid games in which individuals choose to contribute to an informal mutual insurance pool. Individual coverage is determined by the aggregate level of contributions and a sharing rule. We analyze theoretically and experimentally the (ex ante) efficiency of equal and contribution‐based coverage. The equal coverage mechanism leads to a unique no‐insurance equilibrium while contribution‐based coverage develops multiple equilibria and improves efficiency. Experimentally, the latter treatment reduces the amount of transfers from high contributors to low contributors and generates a “dual interior equilibrium.” That dual equilibrium is consistent with the co‐existence of different prior norms which correspond to notable equilibria derived in the theory. This results in asymmetric outcomes with a majority of high contributors less than fully reimbursing the global losses and a significant minority of low contributors less than fully defecting. Such behavioral heterogeneity may be attributed to risk attitudes (risk tolerance vs risk aversion) which is natural in a risky context.     

NONLINEAR AUTOREGRESSIVE DISTRIBUTED LAG APPROACH AND BILATERAL J‐CURVE: INDIA VERSUS HER TRADING PARTNERS

The J‐curve studies related to India have mostly either used aggregate trade flows of India with the rest of the world or between India and its trading partners. They have all assumed exchange rate changes have symmetric effects on Indian trade balance. In this article, we use partial sum concept combined with the nonlinear autoregressive distributed lag approach of Shin et al. to show that indeed in some instances, there are evidences of asymmetry effects of currency depreciation. This new nonlinear approach provides more support for the J‐curve than the previous linear approaches. (JEL F31)