Direct Spillover Effects Research Articles

International Responses over Nontraditional Security Threats: A Comparative Analysis into Rational and Sources

Security concerns of the contemporary period have gone beyond the traditional form of existential threats caused by conventional military forces to a vast range of non-conventional security concerns, including climate change, pandemics, and cyber threats. The direct spillover effects of these non-traditional security issues do not just influence national relations but require global cooperation and a comprehensive approach. In conclusion, increased international cooperation will be essential along with the principle of equitable resource distribution and the pursuit of novel technological solutions to attain lasting resilience against NTS threats. As such pressures on human security continue to unfold, it is critical that the global community facilitate adaptive measures and strong frameworks for global security and stability. This paper represents the value added to the scientific debate on nontraditional security, as effectiveness is linked to international responses, with further recommendations for better action toward implementation.

ESG Spillover and Volatility

Abstract This study investigates the spillover effects of ESG scores from companies operating in the same industry and their impact on stock return volatility. For this purpose, I considered a sample of European listed companies from 2019 to 2022. The results provide evidence of a spillover effect of ESG scores on the ESG ratings of other companies belonging to the same industry. Furthermore, I observed direct spillover effects of the individual Environmental, Social and Governance pillars, with similar magnitudes. I also found that stock return volatility is directly related to ESG scores, including spillover effects.

Does digital economy development promote innovation efficiency? A spatial econometric approach for Chinese regions

ABSTRACT In the context of the rapid development of the digital economy, it’s an important topic how to play the role of digital technology in improving innovation efficiency. Employing the spatial econometric model with province-level panel data during 2006–2018, the article explores the impact of the development of the digital economy on innovation efficiency in China. The analysis unveils three major findings. First, the innovation efficiency has significant positive spatial externalities and the digital economy has significantly positive direct effects and spatial spillover effects on innovation efficiency, but the above effects are heterogeneous for different regions and innovation subjects. Second, the impact of digital economy development on innovation efficiency has characteristics of a certain degree of lag effect and continuity. Third, the threshold effect analysis reveals the non-linear characteristic of the increasing marginal effect of the digital economy on innovation efficiency. Altogether, the development of the digital economy has become an important driving force for promoting China’s innovation efficiency. The findings of this paper provide empirical evidence for understanding the relationship between the digital economy development and innovation efficiency, giving significant implications for the innovative development of developing countries.

The effects of the Eurasian Economic Union on regional foreign direct investment and implications for growth

The positive direct and indirect spillover effects of foreign direct investment on growth are often case specific and not necessarily uniform nor easily predicted. Effects of FDI due to international investment policy changes are often confounded by free trade and customs union agreements that occur simultaneously because trade may be a complement to or substitute for FDI. We review the effects of regional trade agreements on FDI and focus on the new Eurasian Economic Union (EAEU). With annual data from 1995 to 2019 for post-Soviet countries, three members, the Russian Federation, Belarus, and Kazakhstan and nine non-members, Armenia, Azerbaijan, Georgia, Kyrgyz Republic, Moldova, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan, we estimate the EAEU integration effect on country FDI flows, post-2010. We control for other determinants, including infrastructure development, natural resource rents, potentially confounding trade flows, the financial crisis, sanctions against Russia and country fixed effects. The formation of the EAEU did not stimulate FDI and while GDP grew it was not associated with higher FDI. Further growth opportunities via FDI lie with relationships with countries outside the EAEU.

Study on the spatial spillover effects of cement production on air pollution in China

Since 1985, China has become the largest cement producer and consumer in the world. The pollutants emitted from cement production and processing have aggravated China's pressure to conserve energy and reduce emissions. Considering the fact of cross regional transfer and capacity replacement of cement industry, this paper explores the influence of cement production on air pollution by using spatial econometric models. The results illustrate that the concentration of PM2.5 is obviously spatially dependent and presents high-east and low-west agglomeration characteristic on a national scale. Moreover, the positive correlation between cement production and air pollution is quite obvious, the spatial spillover effects of cement production on air pollution increase progressively, and the indirect spillover effects are seven times greater than the direct spillover effects. The results also show that the phenomenon of cement industries obtaining benefits at the cost of hurting air quality in surrounding areas is the most severe in eastern China. Thus, rules should be based on local conditions when making policies in cement industries and the strong correlation between the pollution of adjacent areas should be fully considered.

The Impact of Foreign Direct Investment Spillover Effects on Total Factor Productivity in Sri Lanka

This paper examines whether FDI generates productivity spillovers in Sri Lanka, using the annual data over the period from 1978 to 2015. The autoregressive distributed lag model has been estimated to investigate the effects of FDI, research and development, human capital, international trade, technological gap, rate of inflation, population growth and civil war on total factor productivity (TFP). The results reveal that FDI positively influences TFP. The results also confirm that research and development, human capital and international trade have positive effects. The findings suggest that Sri Lanka needs to increase investment in human capital and in research and development and needs to introduce policies to attract FDI inflows.

Understanding the Nature and Effects of Content Providers’ Switching Behaviors: Evidence from Online Live Streaming

Content providers in online social media platforms, particularly live streaming, often switch content categories. Despite the uniqueness and importance, there is a dearth of academic research examining the unintended effects of providers’ content switching. We study the direct and indirect spillover effects of content switching for live streamers--individuals who broadcast content through live streaming platforms. We propose a framework based on theories related to viewer flow and network effects to conceptualize the direct and indirect spillover effects of entrant streamers’ content switching on the incumbent streamers. Contrary to conventional wisdom which concerns about the negative effects on the incumbent’s viewership due to network congestion, we propose two positive spillover effects that are unique to the social media platform setting: a) the entrant streamers not just increases network congestion, but they also bring their own viewers to the new category, which benefit the incumbent streamers due to a streaming flow effect (direct spillover); and (b) the entrant streamers influences incumbent streamers’ viewer size by boosting category visibility through indirect network effects (indirect spillover). We also propose that the two spillover effects are contingent on the size of the entrant streamers’ follower base. Based on a unique observational dataset from the leading live streaming platform (Twitch.tv), particularly with viewer flows data at the streamer-session level, we first estimate that an average content switching is associated with a 1.3% net increase in direct net viewer flow from the entrant to an incumbent. And this direct spillover effect is attenuated by the size of entrant streamers’ follower base. We also estimate that an average content switching is associated with a 2.1% net increase in (indirect) net viewer flow from outside categories to an incumbent streamer. And this indirect spillover effect is reinforced by the entrant streamers’ follower base size. This study contributes to the emerging literature on the dynamics of content switching on social media platforms in the emerging context of live streaming. We discuss the managerial implications of this study for streaming strategies and platform management.

The United Nations Force Intervention Brigade: Wither the SADC/ICGLR Synchronised Peace Support Efforts in the Eastern Democratic Republic of Congo Recurring Conflict?

From the time it deployed in the eastern DRC in 2013 up to the first quarter of 2016, arguably no much tangible progress has been made by the United Nations Force Intervention Brigade (UN FIB). The security situation in eastern Congo continues to be unstable. This instability has serious direct security threats and spillover effects on respective neighbouring countries that are either part of the Southern African Development Community (SADC) or the International Conference on the Great Lakes Region (ICGLR). There are certain constraints that the FIB has continued to encounter in the context of regional and international political and strategic dynamics surrounding eastern Congo recurring conflict. This paper argues that one of the contributing factors behind the challenges encountered by the UN Force is the fact that both the ICGLR and the SADC efforts at enhancing peace enforcement in the eastern DRC have been overshadowed by the self-interests of international actors. Arguably, this scenario has impacted negatively on the ICGLR/SADC synchronised efforts towards the effectiveness of the FIB. The paper makes some recommendations on how best to attain sustainable synergy between the ICGLR and SADC in order to enhance the strategic and operational efficiency and the effectiveness of the UN FIB in the eastern Congo conflict.

Paradoxical effects of local regulation practices on common resources: evidence from spatial econometrics

ABSTRACT This paper innovatively applies a spatial lagged model to investigate the consequences of the devolution of environmental regulation in the absence of knowledge-based, sustainability-oriented nested institutions. Chinese provinces are taken as self-organising social groups sharing a common resource of air quality. The spatial measurement shows that air quality has a positive spatial spillover effect on neighbouring provinces. Due to a tragedy-of-the-commons vicious cycle, however, the estimated direct, indirect and overall spatial spillover effects of the provinces’ self-regulation practices on the common resource are all negative. That is, local regulations through investments for waste gas treatment exert paradoxical counter-productive effect on common resource of air quality in the local province and neighbouring provinces. These findings confirm that, in the absence of nested institutions that are based on system-level, sustainability-oriented knowledge management, even commons-protecting actions at individual provincial level may result in jeopardised common resources at the system level.

Spatial spillover effects and risk contagion around G20 stock markets based on volatility network

Employing the spatial econometric model as well as the complex network theory, this study investigates the spatial spillovers of volatility among G20 stock markets and explores the influential factors of financial risk. To achieve this objective, we use GARCH-BEKK model to construct the volatility network of G20 stock markets, and calculate the Bonacich centrality to capture the most active and influential nodes. Finally, we innovatively use the volatility network matrix as spatial weight matrix and establish spatial Durbin model to measure the direct and spatial spillover effects. We highlight several key observations: there are significant spatial spillover effects in global stock markets; volatility spillover network exists aggregation effects, hierarchical structure and dynamic evolution features; the risk contagion capability of traditional financial power countries falls, while that of “financial small countries” rises; stock market volatility, government debt and inflation are positively correlated with systemic risk, while current account and macroeconomic performance are negatively correlated; the indirect spillover effects of all explanatory variables on systemic risk are greater than the direct spillover effects.

Agglomeration and Spatial Spillover Effects of Regional Economic Growth in China

As the processes of globalization and localization deepen, spatial externalities of economic growth are becoming increasingly apparent. The agglomeration mechanisms and spillover effects of China’s regional economic growth are also gradually gaining attention. Nevertheless, there is a continuing lack of research at the prefecture and county levels. As a result, building on the foundations of new economic geography and centered on the concept of market potential, this paper used spatial econometrics and panel data from Chinese counties to calculate inequality in the economic growth of counties at the prefecture level for the period 1992–2013. It also investigated the agglomeration versus economic inequality trade-off as well as quantitatively measuring spatial spillover effects at the county and prefecture level in China. The results showed that economic agglomeration, represented by market potential, had a significant influence on economic growth at the prefecture level in China. In addition, economic agglomeration exacerbated regional economic inequality, but economic inequality within a controllable range was found to have a positive influence on economic growth. Thus, there is a trade-off between economic growth and economic agglomeration. Economic growth at the prefecture level in China is not yet free of the effects of basic factors of production, and direct spillover effects, represented by market potential, have the most significant and strongest positive influence on economic growth. Moreover, it was found that the economic growth of prefectures was inseparable from the random impacts of surrounding prefectures and that it was also affected by indirect spatial spillover effects. On the whole, the rational use of the benefits of regional economic agglomeration and spillover effects, the gradual removal of market barriers, and the transformation of the development of prefecture-level economic growth will be the keys to prefecture-level economic development in the future.

Exogenous shocks and the spillover effects between uncertainty and oil price

This paper evaluates the information spillover between equity-related uncertainty and the oil price before and after the 2008 global financial crisis, and the effects of exogenous shocks on the pattern of information spillover. In particular, we investigate mean and volatility spillovers between uncertainty and the oil price with and without exogenous shocks by using a bivariate EGARCH model. There are two main findings in our paper. First, the evidence ensures significant information transmission between equity-related uncertainty and the oil price, and shows remarkable differences in transmission patterns before and after the crisis. Second, the results show that exogenous shocks can intensify information transmission between oil prices and uncertainty in terms of both the mean and volatility spillover effects. Moreover, exogenous shocks exhibit direct spillover effects on oil prices.

Impacts of Large Disasters on the Macroeconomy and Financial Markets

1. Introduction. 2. Case Studies. 3. Direct Effects and International Spillover Effects on the Macroeconomy: Dynamic Panel GMM Analysis. 4. Direct Effects and International Spillover Effects on Financial Markets: Event Study Approach.

Risk Exposures and Financial Spillovers in Tranquil and Crisis Times: Bank-Level Evidence

For a sample of 83 financial institutions during 2003–2011, this paper attempts to answer three questions: first, what is the evolution of banks’ stock price exposure to country-level and global risk factors as approximated by equity indices; second, which bank-specific characteristics explain these risk exposures; third, are there clusters of banks with equity price linkages beyond market risk factors. The paper finds a rise in sensitivities to both country and global risk factors in 2011, although on average to levels still below those of the subprime crisis. The average sensitivity to European risk, specifically, has been steadily rising since 2008. Banks that are reliant on wholesale funding, have weaker capital levels and low valuations, and higher exposures to crisis countries are found to be the most vulnerable to shocks. The analysis of bank-to-bank linkages suggests that any “globalization” of the euro area crisis is likely to be channelled through U.K. and U.S. banks, with little evidence of direct spillover effects to other regions.

Risk Exposures and Financial Spillovers in Tranquil and Crisis Times: Bank-Level Evidence

For a sample of 83 financial institutions during 2003–2011, this paper attempts to answer three questions: first, what is the evolution of banks’ stock price exposure to country-level and global risk factors as approximated by equity indices; second, which bank-specific characteristics explain these risk exposures; third, are there clusters of banks with equity price linkages beyond market risk factors. The paper finds a rise in sensitivities to both country and global risk factors in 2011, although on average to levels still below those of the subprime crisis. The average sensitivity to European risk, specifically, has been steadily rising since 2008. Banks that are reliant on wholesale funding, have weaker capital levels and low valuations, and higher exposures to crisis countries are found to be the most vulnerable to shocks. The analysis of bank-to-bank linkages suggests that any “globalization” of the euro area crisis is likely to be channelled through U.K. and U.S. banks, with little evidence of direct spillover effects to other regions.

Oil and Growth in the Republic of Congo

This paper investigates the linkages between oil and growth in Congo, where there appears to be no evidence of direct spillover effects. The empirical results suggest however that political instability has a negative effect on non-oil growth, and that the presence of oil could have fueled political instability by being associated with weakening institutions. The results also show that fiscal discipline is beneficial for growth. In addition, there are strong linkages between world oil prices and the real effective exchange rate, with movements in the latter having important indirect repercussions for growth.

Pattern indifference: The response of pay setters to the 1993 GM-UAW settlement

Prominent union wage settlements are sometimes thought to have a pattern-setting influence on the economy as a whole. However, a telephone survey after the GM-UAW settlement in the fall of 1993 reveals widespread ignorance of the settlement on the part of wage setters. Such ignorance suggests that big union settlements do not have direct spillover effects outside their immediate industries.