Advanced Econometrics Research Articles

Measuring the Unmeasurable: Decomposing Multidimensional Rural Poverty and Promoting Economic Development in the Poorest Region of Luzon, Philippines

Poverty is the oldest social problem that ever existed and is difficult to reverse. It is multidimensional and unmeasurable. Thus, measuring by decomposing rural multidimensional poverty is critical. Most poverty studies are usually generic, exposed to large sampling errors, and intended for macroeconomic decisions. Thus, measuring poverty for a specific locality with various configurations (15) is critical for economic development. The paper combines predictive analytics and advanced econometrics to decompose poverty at the micro-level by utilizing the Community-Based Monitoring system at complete enumeration (L = 34, S = 4). Logistic Regression (78) Models with 19 Independent Variables and 12 Intervening Variables were fitted. Headcount Analysis (0.2138–0.9845), Poverty Gap (0.2228–0.0502), Severity statistics (0.0723–0.0168) and Watts Index (0.2724–0.0618) are scrutinized. Poverty levels vary by location; a significant fraction of the population (P0i = 68.50%, P0f = 55.80%) and households (P0i = 63.70%, P0f = 50.70%) live below the poverty line and food threshold. It has been revealed that poverty is extreme in Isarog (i = 0.7793), moderate in Poblacion (p = 0.4019), intense in Ranggas (r = 0.6542), and severe in Salog (s = 0.6353). Multidimensional variables (13VAR) significantly predict poverty outcomes (p-value = 0.0000, PseudoR2 = 0.75). Moreover, intervening variables have been impacting poverty across all locals. All models tested are significant across all sectors and correctly predicted by the model classifications (Estat = 73.29–74.12%). Poverty is multifaceted; thus, it requires different interventions. Finally, policy proposals (54) were outlined to alleviate poverty and promote local economic development.

Digital Dividends: Exploring The Impact Of Telecommunication Infrastructure On Economic Growth In India

This paper examines the effect telecommunications infrastructure has on the growth of the Indian economy, emphasising the role that telecommunication usage and tools play on the GDP per capita and other economic parameters. It accesses information from different organisations, including the Telecom Regulatory Authority of India and UDISE+, to study the links between wireless and wireline users, user density, and school digital access and their impact on economic indicators. With advanced econometrics models, i.e. OLS regression, correlation analysis, random forests, step-wise regression, granger analysis, adfuller, and others, predictable solid relationships and directional relationships are proved to exist between the telecommunications background and GDP growth variable. The study results indicate that in India, there is a strong correlation between internet access in schools and wireless internet users. Moreover, it proposes policies to catalyse economic growth and digital adoption in India. It is a resource that policymakers can leverage to make the right decisions in harnessing the power of ICT for economic development

Influence of vaccination on COVID-19 reproduction rate: Time trends and persistence analysis

This paper aims to study how the increase in vaccination rate in Israel affect to the behavior of COVID-19 reproduction rate, from 19 December 2020, to 25 April 2021. Multiple advanced econometrics methodologies are used to analyze the degree of persistence, to understand the relationship between these two times series and the long-term behavior. The results of our study indicate that the vaccinations cause long-run effects to COVID-19 reproduction rate and the vaccination provides useful information to predict the COVID-19 reproduction rate. Also, we determine whatever exogenous shocks related with the virus reproduction will have a very short impact over time. The first change in trend occurs on 13 January 2021, with 24.37% of the population vaccinated and when it can be seen that the increased rate of vaccinations causes the infection rate to decrease.

Critical mass in a crowd: A predictive model of online crowdfunding of public goods in the U.S. vs. U.K

Research on differences in public goods crowdfunding donation behavior among top-performing markets is scarce, particularly among countries that are often considered culturally similar overall but have differences that may affect crowdfunding donation behavior (e.g., the U.S. and U.K.). With addressing this gap in mind, we calculate the “critical mass” numbers for both markets using scraped data from major crowdfunding sites and advanced econometrics and analytics techniques. While fewer contributors are required for a U.S. crowdfunding campaign to “take off,” U.S. contributions decrease afterward. Meanwhile, U.K. participants follow the opposite pattern, contributing at a slower yet steadier pace over time, with more successful campaigns long term. Further, lower (higher) information efficiency leads to lower critical mass numbers, lower duration, and more donors for the U.S. (U.K.). The findings contribute to the literature on global crowdfunding by characterizing idiosyncrasies of the top two crowdfunding markets in donation behavior toward public goods campaigns.

Food security in Nigeria amidst globalization, economic expansion, and population growth: A wavelet coherence and QARDL analysis

Food security is crucial on a global scale as it provides essential health, social, and economic advantages to the human population. Therefore, to achieve the sustainable development goal of zero hunger (Goal 2), it is imperative to assess the progress of food security, particularly in developing countries. Thus, this reflects on the relative factors affecting food security in Nigeria from 1980 to 2022. The study utilized advanced econometrics approaches such as Quantile Autoregressive Distributed Lag (QARDL) and Wavelet Coherence (WTC) to analyze the data. Food security is measured using the food production index (FPI), while other variables such as globalization (GLOB), population growth (POP), gross domestic product (GDP) as a measure of economic growth, and inflation are considered. The results of the Quantile Autoregressive Distributed Lag analysis indicate that in the short-term, globalization has a beneficial impact on FPI at the 0.25 quantile, but it has a detrimental effect on food security at the 0.50 and 0.75 quantiles. Nevertheless, over a prolonged period, the effect is detrimental in all quantiles. Additionally, in the short-term, FPI experiences a beneficial effect from GDP in all quantiles. Over time, GDP has a positive effect on all levels of income distribution. However, in the short-term, the size of the POP has a negative effect on FPI for the 0.25 to 0.75 quantiles. Further discussion is dedicated to policy options and their implications.

Decoding Inflation: Role of Institutional Quality in Türkiye Using Advanced Econometric Techniques

Decoding Inflation: Role of Institutional Quality in Türkiye Using Advanced Econometric Techniques

The Influence of Digitalization on The European Labour Market – An Advanced Econometric Approach

Considering the significant impact that digitalization and digital transformation have on the economy and society, this paper aims to provide a comprehensive analysis of the effects of this phenomenon across European Union Member States. The analysis will be realized using the Gaussian Graphical Model, based on two sets of indicators: one representative of digital infrastructure and human capital, and the other of the socio-economic impact, for the time period 2011-2022. The findings presented in this paper will show the complex relationship between digitalization and the labour market, highlighting both positive and negative connections between the variables analyzed. Furthermore, the study will emphasize the growing importance of digital transformation in all its facets.

Unlocking information technology infrastructure for promoting climate resilience and environmental quality

We examine the role of Information Technological Infrastructure (ITI) in promoting climate resilience and environmental quality in OECD countries. Our empirical strategy is framed in the advanced econometrics methodology. Our analysis begins with standard specification, which controls for unobserved factors in the panel data. We then explore the variables' long and short-run relationships using the Generalised Method of Moment dynamic family specifications. We also evaluate the heterogeneity drivers of environmental quality using Quantile via Moment. The analysis is also extended using alternative and complementary statistical procedures by Hausman–Taylor and Feasible Generalised Least Squares as robustness checks. Our findings indicate that ITI and renewable energy significantly mitigates carbon emissions and can be helpful in achieving a net-zero target. In contrast, the empirical evidence reveals that economic growth and non-renewable energy usage are harmful to the environment. The finding also suggests a significant degree of heterogeneity exists in the covariates on the conditional distribution of environmental quality and its driven factors. While the findings reaffirm the significance of ITI in ensuring careful planning and monitoring of critical infrastructure, they also show that ITI can be used to balance the entire system by creating resilience. We strongly suggest that policymakers should use ITI to spur innovation and drive better solutions for energy transition and environmental improvement.

Natural resources, fiscal decentralization, and environmental quality in China: an empirical analysis from QARDL approach.

It is generally believed that fiscal decentralization is an essential way to increase the overall effectiveness and efficiency of the government through the transfer of financial autonomy to the local governments. On the same lines, this study attempts to confabulate the influence of two important economic indicators, (i) fiscal decentralization and (ii) natural resource rent in validation of the environmental Kuznets curve hypothesis. Our current analysis is grounded upon a developing economy - China - and will serve as a stepping stone for the similar economies. The time period for the empirical estimation is from 1990 to 2020. The study applied an advanced econometrics approach, called the quantile autoregressive distributed lag (QARDL), which has many advantages as compared to any conventional approach. The empirical outcomes, after estimations, illustrate that in the long run, FDE is having an unfavorable connotation with CO2 emissions. NRR is another essential factor influencing the CO2 emissions in the long run in the selected economy. The estimated outcomes are revealing the presence of the EKC. Furthermore, the present research elucidates the existence of the bi-directional causality between selected economic indicators, FDE and CO2 emissions, and GDP square and CO2 emissions. But there is a unidirectional causality between GDP and CO2 emissions. Thus, policymakers should encourage the transfer of powers to the lower tiers of government to ameliorate environmental quality in the Chinese economy.

The asymmetric relationship between public-private partnerships investment in energy and environmental degradation for sustainable development: new evidence from quantile-on-quantile regression approach.

According to the United Nations Agenda, the 2023 sustainable environment is necessary to secure this planet's future; public-private partnerships investment in energy is crucial to sustainable development. The research examines the quantile association between public-private partnership ventures in energy and environmental degradation in ten developing nations, and data is used from January 1998-December 2016. The advanced econometrics quantile-on-quantile regression approach is used to control the issues of heterogeneity and asymmetric relationship. According to the quantile-on-quantile approach, there is a strong positive association between public-private partnerships in energy and environmental degradation in Argentina, Brazil, Bangladesh, and India. But the negative relationship is observed on different quantiles of China, Malaysia, Mexico, Peru, Thailand, and the Philippines. The findings suggest that the world needs to act as a single community and divert its resources toward renewable energy sources to control climate change; also, to accomplish the UN 15-year road map of Agenda 2023 with 17-SDGs; out of these 17 sustainable goals, SDG-7 is related to affordable and clean energy, SDG-11 is about sustainable cities and communities, and SDG-13 focuses on climate action for sustainable development.

Revisiting the finance-growth nexus in Hong Kong: fresh insights from nonparametric analysis

PurposeSince financial sector plays a critical economic role in Hong Kong, the current research aims to comprehensively analyze the association between financial development and economic growth in the country to draw correct conclusions about the impact that financial sector's development has on the growth of the economy. This requires both using of more comprehensive data that includes all or nearly all elements of the country's financial sector and utilizing advanced econometrics techniques to provide more reliable evidence based on the findings. In the study, both issues have been addressed more academically to aid the relevant authorities better.Design/methodology/approachThis study empirically examines the financial development-economic growth nexus in Hong Kong employing data covering 1980–2019. The quantile-on-quantile (QQ) approach of Sim and Zhou (2015) is utilized to investigate certain subtle aspects of the association linking financial development and economic growth. In addition, the authors benefit from applying the nonlinear Granger causality test of Diks and Panchenko (2006) to assess the variables' nexus in a nonlinear manner.FindingsIn contrast to the evidence of a unidirectional linkage documented in many related studies, the empirical findings suggest that a bi-directional relationship exists between financial development and economic growth for Hong Kong. This is a helpful input for the relevant policymakers and implies that they can set appropriate policies and regulations to balance financial development and economic growth in this country.Originality/valueThe originality of this study can be divided into two parts. Methodologically, unlike past studies that utilized mostly linear and parametric methods, the paper contributes to the literature by applying the more robust nonparametric and nonlinear methodologies. Theoretically, most researchers have used various financial development indicators, which led to very different conclusions. Therefore, this study attempts to resolve this deficiency in the literature by using a more comprehensive index for financial development.

Do renewable energy consumption and financial development contribute to environmental quality in MINT nations? Implications for sustainable development

Maintaining a balance between the well-being of the economy and the environment has become a top priority for governments globally. In the contemporary age, world economies, particularly the emerging ones like MINT nations, highlight the need for eco-friendly economic expansion. The MINT nations are thriving economically but are having difficulty reducing their Ecological footprint (EF). This paper aimed to determine if factors such as population density, renewable energy, foreign direct investment, economic growth, and financial development impact ecological footprint in the MINT countries between 1990 and 2018. The study applied ample advanced econometrics such as method of moments quantile regression (MMQR), augmented mean group (AMG) and Common Correlated Effects Mean Group (CCEMG). The overall results indicated that the variables are integrated at the first difference and are cointegrated. The AMG, CCEMG and MMQR results reveal that economic growth deteriorates ecological well-being by promoting the EF while foreign direct investment, population density and renewable energy assists in enhancing it by mitigating the EF in the MINT nations. In addition, financial development does not exert a significant effect on EF. The Dumitrescu Hurlin Panel Causality results show unidirectional causality from economic growth, financial development, population density, and renewable energy to EF. Based on these results policy recommendations are suggested.

Rethinking social change: Does the permanent and transitory effects of electricity and solid fuel use predict health outcome in Africa?

One of the greatest global challenges of this 21st century is electricity deprivation, which involves extending access to electricity to hundreds of millions of people, while simultaneously trying to improve the quality of life and maintain their good health. Electricity deprivation combined with poor health systems and social circumstances can be a problem as it tends to expose the population to greater health risks. While the opponents of energy use almost never deny that electricity use is necessary for health, instead, they failed to admit that a lack of readily available electricity could mark the difference between life and death. This is because reliable electricity supply is required for basic socioeconomic needs such as home cooking and storage, water supply, lighting and reduction of indoor air pollution that may arise from solid fuel usage. This study examines the permanent and transitory effects of electricity and solid fuel use on health in Africa. The empirical strategy combines the van praag transformation and advanced econometrics based on Mundlak methodology. By using the Mundlak statistical procedure, the study breaks down the permanent and transitory effects of energy use (electricity and solid fuel use) on health. The study also corrects for potential endogeneity problem using the Hausman -Taylor statistical procedure. It further strengthened the analysis by correcting for cross panel correlation using the Feasible GLS methodology. The findings revealed that having access to electricity reduces health risks associated with burning solid fuels in Africa.

Is economics STEM? Process of (re)classification, requirements, and quantitative rigor

From 2012 to 2019, the proportion of undergraduate economics degrees denoted as “Econometrics and Quantitative Economics” (STEM-eligible) conferred annually increased from 1 percent to 22 percent. The authors present results from a survey of the 73 institutions conferring at least one STEM-eligible economics degree in 2017 or 2018. They find that most institutions (59%) offer both traditional and STEM-eligible degrees and report needing departmental, college/university committee, and provost/dean approval to (re-)classify. The main motivation for this change is maintaining consistency with an increasingly quantitative discipline (73%). The significant differences in requirements between STEM-eligible and traditional economics degrees are the proportion requiring single variable calculus (91% vs. 69%), multivariable calculus (70% vs. 31%), linear algebra (48% vs. 21%), basic econometrics (96% vs. 77%), and advanced econometrics (48% vs. 8%).

Does governance quality matter in the nexus of inclusive finance and stability?

PurposeDespite numerous evidence of policy trade-off in financial inclusion-stability nexus, little is known about the role of governance quality to align policy goals and maximizing the social benefits. Therefore, to fill the gap, this study focuses to investigate the moderating effect of country governance (CG) in the interplay between financial-inclusion (FI) and financial-stability (FS), using a large panel of 84 economies covering the years 2004–2017.Design/methodology/approachFor attaining this objective, the study constructs several indexes for FI, FS and CG using principal component analysis (PCA) and examines how FI influences FS at different CG levels applying advanced econometrics. FindingsThe results show that CG plays a very crucial role in eradicating the trade-off and strengthens the synergy between FI and FS. The findings are insensitive to several robustness validations and could be constructive for policymakers to devise policies and to ensure financial stability.Originality/valueAs far as the authors are aware, this is the only paper that empirically explains CG's role in FI-FS nexus.

Do labor remittance outflows retard economic growth in Qatar? Evidence from nonlinear cointegration

This paper explores the effects of remittance outflows on real GDP per capita in the Qatar economy. While few works investigated the impact of remittance outflows on economic growth for remitting countries, they did not examine the potential asymmetric impact on economic growth. This study fills this gap by examining the asymmetric impacts of remittance outflows on real GDP per capita and non-oil real GDP per capita in Qatar over the period 2000:Q1-2019:Q4. The empirical estimation is based on an advanced econometrics technique, namely the nonlinear autoregressive distributed lags (NARDL) proposed by Shin et al. (2014). The empirical findings reveal that remittances outflows have negative and significant impact on real GDP per capita in Qatar economy. In particular, positive changes of remittance outflows exert a greater impact on non-oil real GDP per capita than negative changes. A larger increase in remittance outflows would lead to a decrease in the aggregate demand and produce a deflationary pressure. The magnitude of remittance outflows and their asymmetric impact are extremely important outcomes that should be considered by policy makers in this regard. Thus, specific national polices are needed to create a diversified labor market, encourage foreign workers’ spending, and increase the local workers’ participation in the economy.

Co-movement dynamics of US and Chinese stock market: evidence from COVID-19 crisis

This paper aims to examine the co-movement between the two economic powers, namely the USA and China. The authors are mainly interested in examining the dynamics of co-movements during, and in the pre-covid periods. Additionally, they have aimed to examine the volatility spillover between USA and China, during and in the pre-covid periods. In order to achieve the research-based objectives, advanced econometrics models have been applied to the data from July1, 2010, to April 30, 2021. The results show that the sample market is integrated in the long run. The results also indicate that the behaviour of the Chinese market is same as the US market, and offers negligible opportunities for investors for diversification during this time. The findings indicate that the Ganger Causality between the stock markets during crisis is significantly higher than the pre-crisis period. The results of EGARCH model confirm the presence of asymmetric volatility spillover effects between the US and Chinese markets, during the considered time periods. This study also examines the co-movement in China, grounded upon the robust approach that facilitates examining the dependence structure between the sample variables. The findings offer valuable understanding for investors who are looking for investment diversification opportunities worldwide.

Decomposing the Persistent and Transitory Effect of Information and Communication Technology on Environmental Impacts Assessment in Africa: Evidence from Mundlak Specification

This study examines the persistent and transitory effects of information and communication technology (ICT) on the environmental impact assessment in Africa. The applied advanced econometrics is based on both the Mundlak and Hausman–Taylor methodology for correcting endogeneity and the feasible generalized least squares (FGLS) method to identify any potential cross-panel correlation. The empirical evidence suggests that an increase in ICT (Internet penetration) has a positive transitory effect on the environment. On the contrary, an increase in ICT has a negative persistent effect on the environment. This implies that a temporary change in ICT usage increases carbon emissions, whereas ICT use can reduce carbon emissions in the long run. In addition, this study identified mediums through which ICT can affect the environment, such as energy consumption. Therefore, this study recommends continuous investment in ICT infrastructure and education on the importance of practicing environmentally sustainable practices. Similarly, energy conservation is critical because use of the Internet appears to indirectly increase energy usage by increasing the overall productivity of the economy, which may subsequently degrade the environment.

Who Wants to Go to Work Revisited

This paper extends and re-examines the author's previous findings using the same 2010 Canada Survey of Household Spending. Using a more advanced econometrics method, this paper empirically re-tests the four potential factors (price, economic, demographic, and geographic) that were significant. This paper concludes that economic and demographic factors are major determinants for hours of work by Canadians. Unlike the previous study, no provincial effects can be found. This means Atlantic Canadians work less not because of lifestyle choices but because of the lack of economic opportunities.

Residential property market in Malaysia: an analysis of price drivers and co-movements

PurposeThe purpose of this paper is to identify the drivers of residential price as well as the degree co-movement of housing among different states in Malaysia.Design/methodology/approachThis study adopted an advanced econometrics technique: the dynamic autoregressive-distributed lag (DARDL) and – the time-frequency domain approach known as the wavelet coherence test. The DARDL model was applied to identify the cointegrating relationships and the CWT was used to analyze the co-movement and lead–lag relationships among four states’ regional housing prices. The extracted data were mainly on annual basis and comprised macroeconomics and financial factors. Information with regard to residential prices and other variables was extracted from the National Property Information Centre (NAPIC) website, the Central Bank of Malaysia Statistics Report, the Department of Statistics, Malaysia, I-Property.com and the World Bank (WB). The data covered in this study were the pool data from four main states in Malaysia and different categories of residential properties.FindingsThe empirical results indicate that there were long-run cointegration relationships between the housing price and capital gain and loss, rental per square feet, disposable income, inflation, number of marriages, deposit rate, risk premium and loan-to-value (LTV) ratio. While the wavelet analysis shows that (1) in the long run, Kuala Lumpur housing price having strong co-movement with Selangor, Penang and Melaka housing prices except for Johor and (2) the lead–lag relationship also postulates Kuala Lumpur housing price having in-phase category with Selangor, Penang and Melaka housing prices except for Johor.Practical implicationsThis study offers relevant practical implications. First, the study proposes an active collaboration between the private sector and government support which may help to smooth the pricing issue of residential properties. More low-cost residential projects are needed for focus groups including middle- and low-income earners. Furthermore, the results are expected to provide real estate investor in Malaysia, an improved understanding of the regional housing market price dynamics.Originality/valueThe findings of this study were obtained from various reliable sources; therefore, the results reflected the analysis of price drivers and co-movements. Furthermore, findings from this study lend some support to the argument on the rise of residential prices and offer several policy implications from a practical point of view with regard to the residential market.