Degree Of Spillovers Research Articles

English

This study examines the level of linkage between Nigeria and some selected African countries on one hand and the linkages between economic growth, inflation, and unemployment on the other hand, in these economies. The study covers the period between 2000 and 2019. The study aims to first measure the economic distance between Nigeria and these countries using the approach proposed by Mazurek. Second, the degree of spillovers was characterized between Nigeria and these countries, using a VAR-based spillover index method proposed by Diebold and Yilmaz. The main finding of the study is that the selected African economies are quite economically dispersed, and the level of cross-border spillover is negligible. This would suggest that growth in one economy has not been influenced by the growth in the other economies in the region. Given this, the study recommends that policies that will improve intra-African trade should be formulated. Such policies should incorporate a trade-by-barter-like framework, where Africa can demand what it produces and produce what it demands. Essentially, much more attention should be paid to the supply side of the market than the demand side following the Says law that increasing production will naturally result in proportionate increase in demand. To achieve this, enabling environment should be created to engender technological innovations while improving human and capital infrastructures.   Key words: African, development, economic distance, growth, spillovers.

“How Does Nature Deify Us”

“How Does Nature Deify Us”

Following the leaders? A study of co-movement and volatility spillover in BRICS currencies

The paper investigates return co-movement and volatility spillover among the currencies of Brazil, Russia, India, China, and South Africa (the BRICS member countries) and four major developed countries from April 2006 to October 2019. Using Bloomberg daily data on exchange rates, the study employs a flexible multivariate generalized autoregressive conditional heteroskedasticity (MGARCH)–dynamic conditional correlation (DCC) model and a vector autoregressive (VAR)–based spillover index, as the empirical strategy. Along with evidence of exchange rate volatility in BRICS currencies, among which the Russian ruble and the Chinese yuan are explosive, the econometric estimation results show the presence of significant return co-movement and volatility spillover among the foreign exchange markets across different countries. The currency markets in developed countries, as leaders, are found to transmit volatility mostly to BRICS currency markets, which are net receivers. The degree of spillover, however, varies across countries, with Brazil and Russia passing on volatility to the developed countries whereas India, China, and South Africa receive volatility from their developed counterparts.

Avian Reoviruses From Wild Birds Exhibit Pathogenicity to Specific Pathogen Free Chickens by Footpad Route.

Avian reoviruses (ARVs) are ubiquitous in domestic poultry with 80% of them being non-pathogenic and they are frequently found in clinically healthy birds. ARVs have also been known to be the etiological agents of viral arthritis (VA), tenosynovitis, myocarditis, runting-stunting syndrome (RSS), and respiratory and enteric disease in chickens. Significant economic losses during the process of poultry husbandry are due, in part, to unmitigated ARV infections throughout the poultry industry. Recently, many isolates shared genetic similarities between those recovered from wild birds and those recovered from poultry. One explanation may be that there is a degree of spillover and spillback of ARVs between the two groups. However, studies on the role of wild birds in the epidemiology and pathogenicity of ARVs are insufficient. Here, we describe the pathogenicity in specific pathogen-free (SPF) chickens of ARV originating from wild birds. The challenge experiment was conducted in six groups including a negative control group, a positive control group (reference strain of S1133), and four groups (A15-157, A18-13, A18-205, A19-106) infected with ARVs from wild birds. The 7-day-old SPF chickens were inoculated with 106TCID50 ARV to evaluate the clinical signs, changes in weight gain, gross lesions, histological changes, virus replication, and serum antibody levels. The peak of clinical signs was from 3 to 5 days post infection (dpi). In addition, the death of one chicken was found in the group infected with the A18-13 isolate. Reduced body weight was also found in chickens infected with ARVs from wild birds compared to the negative control group. All the ARVs infection groups showed noticeable swelling of the footpad. In addition, ARVs were detected in the bursa, tendon, and hock joint by reverse transcription-polymerase chain reaction (RT-PCR) in all infected groups at 5 and 15 dpi. Histopathological observations revealed acute inflammatory responses on the synovium covering the joint surfaces (arthritis) and tendon sheaths (tenosynovitis), as well as bursa atrophy and lymphocyte depletion. The analysis of the humoral response was performed by ELISA assay, and chickens infected with ARVs showed seroconverted. In conclusion, this study described the typical severe disease of acute VA and tenosynovitis in SPF chickens infected with ARVs derived from wild birds. This study confirmed the pathogenicity of ARVs infection in SPF chickens for the first time, and these results enrich our understanding of the pathogenicity of ARVs derived from wild birds.

Financial connectedness of GCC emerging stock markets

This paper investigates the financial interrelatedness via mean and volatility spillovers across stock markets for the Gulf Cooperation Council countries (Bahrain, Kuwait, Qatar, Oman, Saudi Arabia, and the United Arab Emirates) during the period 2008–2019 utilizing both the spillover index and the multivariate DECO-GARCH model. The results suggest that the average return equicorrelation among GCC stock markets is positive, even though it is found to be very time-varying with specific periods, which impair the benefits of GCC portfolio diversification. Besides, our spillover analysis findings provide several straightforward insights into both the level and the dynamics of stock market integration in the GCC countries over the past 10 years. Our results report significant heterogeneity among GCC stock markets in the degree of spillovers over time, strengthening our understanding of the economic channels through which GCC equity markets are correlated.

Fiscal Decentralization with a Redistribution Rule vs. Fiscal Centralization

This paper compares the case of fiscal decentralization (FD) with an intergovernmental transfer rule to the case of fiscal centralization (FC) from a theoretical perspective while focusing on Markov-perfect Nash equilibrium by a continuum of citizens, local governments and a central government, which interact strategically. Simulation analysis shows both the degree of spillovers and capital mobility play a role in the comparison of these two cases. In the presence of spillovers, the welfare of FD case is higher than the one of FC which is an unexpected result but points out the positive effect of a redistribution rule in FD model in terms of welfare. On the other hand, the growth rate of FD is lower than FC case when there are spillovers. So, fiscal discipline, provided by the redistribution rule, prevents inefficiently low tax rates which pull down the growth rate. In addition, when spillovers are not allowed, capital mobility determines which case is superior.

A Corrective Device for Large Heterogeneous Jurisdictions in a Two-Period Economy with Spillover Effects

The matching grant (the Pigovian tax) program from a central government to the jurisdictional governments is a strong instrument to solve the problem of an insufficiently provision of local public goods. The under-provision (over-provision) of public goods arises from different kinds of externalities, such as the benefit spillovers and the tax-exporting effect. This study introduces the spillover effect of public goods and the heterogeneity of jurisdictions to the capital tax competition literature using a two-period economy. It is assumed that the central government and the jurisdictional governments play a Stackelberg game with centralised leadership and that there is a unique Stackelberg equilibrium in each period. Meanwhile, the central government and the jurisdictional governments are assumed to be hyperopic and benevolent. A clear result is that the revision of a corrective device used by the central government in the first period to ensure an optimal level of a local public good which is provided by a hyperopic jurisdictional government, significantly depends on the relative size of the income and spill-in effects in the second period. When the income effect is larger than the spill-in effect in the second period, the optimal matching grant rate (the Pigovian tax rate) in the first period from the central government to a more hyperopic jurisdictional government should be increased (decreased). Conversely, when the spill-in effect is larger than the income effect in the second period, the optimal matching grant rate (the Pigovian tax rate) in the first period from the central government to a more hyperopic jurisdictional government should be decreased (increased). The relative size of the two effects, which work in opposite directions, is determined by the tastes and endowments of the jurisdictions, the form of their production functions and the degree of spillovers, among other factors. This result is quite different from the literature.

Linkages and Spillovers between Internet Finance and Traditional Finance: Evidence from China

ABSTRACT Investors, researchers, and policy makers have an urgent need to understand the linkages between internet finance and traditional financial markets. This study collects corresponding daily industrial indices of the banking, security, and insurance industries from the Wind database to depict the traditional financial market in China and uses an online loan comprehensive interest rate index as a proxy for internet finance. The empirical results first show that only internet finance and the banking industry have mutual causality. Then, using conditional value at risk (CoVaR) to measure the degree of spillovers, the risk of internet finance is more likely to spill over to the banking industry, followed by the insurance industry and, lastly, the securities industry. These findings are consistent with the closeness between internet finance and the banking, insurance, and security industries, respectively. The linkage relationships and spillover effect are robust to the method and market index applied.

Research Joint Ventures and Cartels in International Product R&D

Purpose – This paper analyzes how Research and Development (R&D) cartelization and Research Joint Ventures (RJV) affect firms that engage in Cournot competition in their product market using a model in which the Home and Foreign firm produce differentiated products and export their total output to a third country’s market. Design/Methodology – In a two-stage game, research expenditures incurred in the first stage improve product quality and are subject to various degrees of spillovers. We consider four different scenarios. Findings – In a symmetric equilibrium we observe the following: (i) an RJV that cooperates in RD (ii) RJV cartelization yields the highest product quality, output, and consumer surplus in the third country; however, the lowest is produced by RD and (iii) each firm’s profit is at its minimum in R&D competition and its maximum in RJV cartelization. Furthermore, if spillovers are strong, the profit of each firm in R&D cartelization is greater than that in RJV competition, and vice versa. Originality/Value – By analyzing product innovation in international markets, we can find similarities and differences between process R&D and product R&D in international markets.

The impact of spillovers on strategic R&D under uncertainty

This study examines the impact of technological spillovers on competitive and cooperative R&D investments under uncertainty. It assumes that the innovation size is given and an increase in R&D expenditure increases the probability of success. It focuses on the symmetric equilibrium and finds that: (i) the equilibrium R&D expenditure under R&D competition (resp. R&D cooperation) may increase (resp. decrease) with the degree of spillovers if the spillovers are sufficiently small, the innovation size is big enough and the probability of success is high (resp. low) enough; (ii) under R&D competition the privately optimal R&D expenditure may overshoot the social optimum if the spillovers are sufficiently small; (iii) under R&D cooperation the private optimum is socially insufficient regardless of the size of spillovers.

Interstate pollution spillover and setting environmental standards

This paper investigates in a multi-level government system, how the federal government sets environmental standards for different states after communicating with state governments regarding the cost of pollution abatement to local economies. Here, the term “federal government” refers to the level of government in a federation responsible for the whole country, while “state governments” are responsible for individual states. We adopt a game-theoretical analysis under asymmetric information where state governments, which know the pollution abatement cost, report to the federal government, which is initially uninformed about the true cost level. We argue that interstate spillover of pollution causes a bias for state governments towards lax environmental standards and gives state governments an incentive to exaggerate the economic cost of pollution abatement. In equilibrium, state governments partition the set of possible costs into disjoint subsets and report the same cost to the federal government under different costs within each partition. After receiving reports, the federal government only knows the partition to which the local cost belongs and sets environmental standards that are not appropriate for the state. On the other hand, when state governments have the authority of setting local standards, the standards are inefficiently lax from a total welfare perspective. The paper compares total welfare levels of all states under the environmental standards set by the federal and state governments. The result indicates that if the degree of spillover is small, the welfare level in the centralized system is less than that in the decentralized system.

Competition and innovation with horizontal R&D spillovers

PurposeThe purpose of this paper is to extend a theoretical framework for analyzing competition and innovation in the presence of horizontal spillovers.Design/methodology/approachA theoretical analysis approach is adopted to drive the paper’s findings.FindingsIt is shown that when firms behave non-cooperatively in both the R&D and production stages, the degree of spillover has a negative relationship with the effective and respective R&D expenditures of each firm as well as the level of social welfare. An inverted-U relationship between competition and social welfare also holds. When firms behave cooperatively in the R&D stage, and non-cooperatively in the production stage the relationship between the R&D expenditure of the joint research lab and the number of firms in the market is negative.Originality/valueIn the literature on R&D spillovers and process innovation, efforts are mostly focused on the comparative R&D expenditures and the relative social welfare between non-cooperative and cooperative R&D. The question of the effectiveness of R&D technology on the optimal number of firm, however, is not explicitly addressed. The paper is intended to address this lacuna.

FDI and long-term economic growth in Egypt

This research paper aims to empirically analyze the impact of FDI on the long-term economic growth of Egypt. An empirical model was developed to explain the aggregate output, including total labor force, capital stock, foreign direct investment, government expenditure, and the real exchange rate. Annual time-series data from 1990–2013 were then used to estimate the model. Prior to calculating this estimation, the properties of the time series were diagnosed, and an error-correction model was developed and assessed. The overall results suggest that foreign direct investment makes a positive, yet weak and insignificant, contribution to the long-term economic growth of Egypt. This finding warrants further investigation to explore the possible reasons behind it, such as the degree of spillover that FDI has on economic growth and its impact on employment in areas like job creation, wage structure, research, and development.

Fiscal centralization vs. decentralization on economic growth and welfare: An optimal-control approach

In this paper, we study the economic growth and social welfare in anendogenous growth model with spillovers of public goods, leviathan taxation and imperfectly flow capital in heterogeneous economies. We show that the effect of spillovers and capital flow on economic growth and welfare is different for well endowed region and poorly endowed region under fiscal centralization and fiscal decentralization. We also show that a decentralized system dominates a centralized system in terms of economic growth no matter whether the region is well or poorly endowed. However, the difference between a decentralized system and a centralized system is ambiguous in social welfare. It is dependent on the degree of spillovers and capital flow no matter whether the region is well or poorly endowed.

R&D Strategy in International Mixed Duopoly with Research Spillovers

This paper examines the international mixed duopoly behaviour with research spillovers. Using a two‐stage game with Research and Development (R&D) and output, we investigate the effects of imperfectly appropriable R&D on optimal R&D strategies of a domestic public firm and a foreign private firm across different market interactions: (i) international R&D competition, (ii) only the foreign firm conducts R&D, (iii) only the domestic public firm conducts R&D, (iv) no firm conducts R&D, and (v) research joint venture. The results show that firms' research performances are determined by the degree of spillovers and the optimal R&D strategies involve R&D competition. Spillovers are shown to be socially beneficial and their absence can prove to be a strategic deterrent, with the public firm monopolising the market. Some of these findings contrast with the traditional models of oligopoly (with or without R&D) and mixed oligopoly (without R&D).

Agricultural intensification exacerbates spillover effects on soil biogeochemistry in adjacent forest remnants.

Land-use intensification is a central element in proposed strategies to address global food security. One rationale for accepting the negative consequences of land-use intensification for farmland biodiversity is that it could ‘spare’ further expansion of agriculture into remaining natural habitats. However, in many regions of the world the only natural habitats that can be spared are fragments within landscapes dominated by agriculture. Therefore, land-sparing arguments hinge on land-use intensification having low spillover effects into adjacent protected areas, otherwise net conservation gains will diminish with increasing intensification. We test, for the first time, whether the degree of spillover from farmland into adjacent natural habitats scales in magnitude with increasing land-use intensity. We identified a continuous land-use intensity gradient across pastoral farming systems in New Zealand (based on 13 components of farmer input and soil biogeochemistry variables), and measured cumulative off-site spillover effects of fertilisers and livestock on soil biogeochemistry in 21 adjacent forest remnants. Ten of 11 measured soil properties differed significantly between remnants and intact-forest reference sites, for both fenced and unfenced remnants, at both edge and interior. For seven variables, the magnitude of effects scaled significantly with magnitude of surrounding land-use intensity, through complex interactions with fencing and edge effects. In particular, total C, total N, δ15N, total P and heavy-metal contaminants of phosphate fertilizers (Cd and U) increased significantly within remnants in response to increasing land-use intensity, and these effects were exacerbated in unfenced relative to fenced remnants. This suggests movement of livestock into surrounding natural habitats is a significant component of agricultural spillover, but pervasive changes in soil biogeochemistry still occur through nutrient spillover channels alone, even in fenced remnants set aside for conservation. These results have important implications for the viability of land-sparing as a strategy for balancing landscape-level conservation and production goals in agricultural landscapes.

Overusing a bypass under cost-based access regulation: underinvestment with spillovers

We explain how underinvestment in infrastructure upgrades is aggravated under access regulation with a cost-based access charge. When a cost-based access charge is imposed on an incumbent, the incumbent has a weak incentive to invest in infrastructure upgrades due to insufficient rewards for the investment. Then, the incumbent’s underinvestment induces the overuse of a bypass by an entrant that chooses productively efficient technology, when the degree of spillover is large, the production cost of the bypass is low, and the incumbent’s investment cost is high. The overuse of a bypass decreases the incumbent’s profits, which further reduces the incumbent’s incentive for investment. Thus, the overuse of a bypass generates a vicious cycle of underinvestment in infrastructure upgrades.

Cooperative and Noncooperative R&D in Two-Sided Markets

In this paper, we analyze the impact of cooperation on R&D investments in a two-sided market, where platforms compete in quantities. We show that if indirect externalities are of a moderate magnitude, the threshold degree of spillovers above which cooperation spurs R&D investments and enhances social welfare increases with the degree of externalities. If indirect externalities are of a strong magnitude, cooperation can also be beneficial in terms of welfare for low degrees of spillovers.

Endogenous R&D spillover and location choice in a mixed oligopoly.

We consider a three-stage game where a public firm and a private firm choose R&D, location, and price, under the assumption that R&D spillovers rely on their locations. We show that, in equilibrium, whether the public firm engages in innovation more aggressively than the private firm depends on the degree of spillovers. Moreover, firms’ equilibrium locations exhibit neither maximal nor minimal differentiation. Finally, privatization could reduce social welfare because it may generate inefficient location and insufficient R&D investment. This suggests that a mixed duopoly could be socially preferable to a private duopoly in the presence of endogenous R&D spillovers.

Distorted access regulation with strategic investments: Regulatory non-commitment and spillovers revisited

We reexamine the properties of access regulation and an incumbent’s incentive for infrastructure investment under regulatory non-commitment and spillovers through access. The results show that when the degree of spillover is small, the incumbent’s strategic opportunity to invest in infrastructure distorts the access charge set by a regulator from a welfare perspective. In particular, when the degree of spillover is small and the incumbent’s investment cost is high (low), the incumbent has an incentive to utilize regulatory non-commitment to induce a high (low) access charge by overinvesting (underinvesting) in infrastructure.