Linear Dynamic Panel Research Articles

Unraveling Dutch disease: remittances and exchange rate dynamics pre and post-GFC trends in 199 countries

PurposeThis study's main objective is to assess remittances' effect on real exchange rate movements pre- and post-GFC.Design/methodology/approachThe sample for this study includes 199 countries and independent territories for the period between 1999 and 2019. Furthermore, this period is divided into pre-GFC (inclusive) from 1999 to 2009 and post-GFC from 2010 to 2019. This paper uses a one-step GMM estimation on linear dynamic panel data.FindingsThe significant results from this study show that the exchange rate of remittances depreciates in every country, especially in low-middle-income countries. It has been found that, in high-income countries, the first lag of remittances has a significantly negative impact.Research limitations/implicationsThis study examines macroeconomic variables and remittance impacts, revealing clear trends in consumption patterns and exchange rates. Families use remittances for savings and investments, depreciating exchange rates. This suggests Dutch disease in economies, especially after GFC.Practical implicationsPolicy implications involve increasing exporter costs through variable taxes or retention, depreciating exchange rates and encouraging recovery from the Dutch disease. This promotes commodity trade and long-term economic benefits, while self-balancing protects against currency value depreciation.Originality/valueThis concepts originality lies in the focus on the impact of remittances on exchange rates and sectoral imbalances in various income-level countries over a significant period. The proposed policy implications aim to address the potential negative consequences of remittances on the economy, making it a valuable contribution to the existing research in this field.

Public Transport Demand Elasticities in Developing Agglomerations: The Case of Tunisian Regions

Abstract This paper examined the characteristics of public transport demand in some major Tunisian cities. It followed the research trend which calculated the public transport demand elasticities. The adopted procedure in this study consists in estimating a log linear dynamic panel model relating per capita bus patronage to bus fares, users’ income, and service quality. Two variants of the basic model were estimated for the most important Tunisian agglomerations for the period 2003-2020. In the first variant, this paper considered the same fare elasticity value for the different regions, whereas in the second it’s proceeded to the calculation of specific fare elasticity values for each region. The estimation results show interesting and different elasticities compared to those revealed by earlier studies for occidental agglomerations. This result can be explained by specifics users’ characteristics and networks’ configuration. Although these results may sometimes contradict the theoretical suggestions, they still highlight the specificities of the public transport demand in Tunisia and its users’ characteristics. The demand for public transport in large Tunisian agglomerations is not very sensitive to fares changes. Second, income does not have the same effect as that advocated by economic theories. Indeed, we have found a positive impact of income on demand for public transport. Finally, the quality of service has the most important effect on demand. Changes in travel habits and cultures, improvements in the quality of services and their differentiation can be more effective for public transport than fares changes.

Implications of overlap in tariff policy on waste management costs in Italian municipalities

Abstract In today’s race toward a more circular economy, optimization of tariff design is important for minimizing the environmental impact and costs of municipal waste management. This study examines the overlap of an incentive-based tariff method and the unit pricing system. We address whether this overlap impacts the effectiveness and efficiency of waste management in Italian municipalities. Based on a panel data sample for 5,512 municipalities from 2016 to 2022, a generalized method of moments estimation was employed for a linear dynamic panel model. The results suggest that there is room for optimizing their overlap under certain circumstances—specifically, when the availability of waste treatment facilities is adequate and the percentage of separate waste collection is high. The interaction between the percentage of separate collection and the incentive tariff method contributed to cost reduction, confirming the need for consistency and compatibility of a tariff scheme with circular economy objectives. The effective adoption of both tools, as well as other actions such as information campaigns and service delivery improvements, can promote waste sorting and investment in management facilities. The results provide insights for policymakers seeking to design more effective and efficient policy measures aimed at maximizing environmental effectiveness, in accordance with the polluter-pays principle, and minimizing costs.

The contribution of agricultural inputs in reducing child stunting

While the impact of agricultural inputs on crop yields has received considerable attention, their influence on nutritional outcomes has been somewhat neglected. This study aims to fill this gap by examining the role of agricultural inputs in mitigating child stunting through linear dynamic panel regressions conducted at the country level. By analysing data from approximately half of the world’s countries over a 20-years period, our findings reveal that mineral fertilizers make significant positive contributions to reducing child stunting. Other agricultural inputs, such as per-capita agricultural land and manure exhibit a positive contribution in reducing child stunting, but their statistical significance is obtained only in few models. Surprisingly, irrigation appears to have no impact on alleviating child stunting.

Colonial status and income inequality in developing countries

This paper assesses the effect of the colonial status of ex-colonies, settler’s mortality rate, and duration of colonization on income inequality using a dataset comprising 78 developing countries over the period 1990 to 2019. We run Ordinary Least Square regressions on the cross-sectional data and subsequently test for sensitivity of the baseline model to historical, geographical as well as sociocultural factors. For robustness checks, we re-estimate the baseline model on a panel data setting using the Hausman Taylor estimator and a GMM linear dynamic panel data model that factors-in time-invariant historical and cultural variables. Results suggest that: (a) average increase in Gini income inequality for ex-settler’s colonies was higher when compared to ex-peasant colonies; (b) an extra year of the duration of colonization augmented typical overall income inequality and (c) the middling rise in income inequality of ex-British colonies was less than the other ex-colonies whilst ex-Spanish colonies posted an average increase in inequality that was higher than the other former colonies. Results were unaltered when we undertake sensitivity and robustness tests. Furthermore, colonial status mediates the relationships between Gini income inequality and settler’s mortality rate as well as Gini income inequality and duration of colonization. Thus, institutions established since colonization and perpetuated after independence have been more or less prone to incorporating redistribution (inequality) issues.

Together in sickness and in health: Spillover of physical, mental, and cognitive health among older English couples.

Using data from eight waves of the English Longitudinal Study of Aging, we study the cross-domain and cross-spouse spillover of health among married adults aged 50 and above in England. We apply the system generalized method of moments to linear dynamic panel models for physical, mental, and cognitive health, controlling for individual heterogeneity and the influence of marriage market matching and shared environments. Our findings reveal bidirectional spillovers between memory abilities and mobility difficulty among men, as well as between depressive symptoms and mobility difficulty among women. Worsening mobility increases the risk of depression in men, but not vice versa. Additionally, gender-specific cross-spouse effects are observed. Women's mental health is significantly influenced by their spouse's mental health, while this effect is weaker for men. Conversely, men's mental health is notably affected by their spouse's physical health. These results highlight the importance of considering spillovers within families and across health domains when developing policies to promote health and reduce health disparities among the elderly population.

A Spatial Exploration of Political Stability, Investment, and Economic Prosperity in Africa

The intricate dynamics between political stability and economic growth have emerged as a central focus of scholarly inquiry and policy consideration. This study delves into the nuanced relationship between political stability, investment, and economic prosperity within the unique context of African nations. Theoretical perspectives on this relationship range from negative to positive, reflecting the complexity of the interplay between political environments and economic trajectories. Drawing on a panel of 48 African countries spanning the years 2000-2020, this study employs a sophisticated generalized method of moments-type estimator for linear dynamic panel data models. Unlike many previous studies, we explicitly address the significance of institutional structures and their role in shaping economic growth dynamics. Our findings reveal that political stability is a key determinant with a structurally significant impact on economic growth. Moreover, the study highlights the catalyzing effect of investment, demonstrating a significantly positive influence on economic growth in politically stable environments.

Electricity fluctuations and tax revenue in Sub-Saharan Africa: insights from a bias-corrected linear dynamic panel model

Electricity fluctuations and tax revenue in Sub-Saharan Africa: insights from a bias-corrected linear dynamic panel model

Bond Market Development and Infrastructure Development Index; an Analysis of African Countries with the Portfolio Investment Bonds

This paper analyses the empirical relationship between portfolio investment bonds and Infrastructure development index in Africa. The study seeks to establish if there is a statistically significant relationship between the portfolio investment bonds and infrastructure development index in Africa. Panel data of 13 countries for the period of 9 years from 2013 to 2022 was adopted. The study is supported by positivism philosophical underpinnings, a quantitative approach, multiple case design. It is a triangulation of correlation, regression, and hypothesis -testing through the linear dynamic panel data Generalized method of Momentum (GMM) model. This model estimates the empirical relationship between the key variables under study. The results from the study indicate a significant positive relationship between the portfolio dollar amount logged twice from the world bank data indicators and the infrastructure index from the Africa Infrastructure development Indicator (AIDI) also logged twice based on the model requirements. Therefore, countries that receive higher portfolio dollar amounts realize more infrastructure development. It is therefore recommended for African countries to create a Political, Economic and Regulatory supportive policies for bond market development especially the portfolio investment bonds. This paper ascertains a relationship between bond market development and Africa infrastructure development index. And develops policy discussions regarding infrastructure financing though a well-developed bond market with a variety of bond types

Monetary policy, threshold of profitability and dynamics of private investment in the West African Economic and Monetary Union

This study investigates the interactions between optimal monetary policy, investment profitability thresholds, and private sector investment dynamics within the West African Economic and Monetary Union. Analyzing data from 2000 to 2021, it employs advanced econometric models (linear, asymmetric, and threshold effect dynamic panel error correction models) to provide a nuanced understanding of the investment environment in the union. The findings reveal the confluence of low returns and high borrowing costs for private investment. Notably, this study suggests that simply pursuing an expansionary monetary policy does not offer a sufficient solution. Instead, it proposes a more accommodative stance by the Central Bank, featuring lower policy rates, to alleviate the negative impact of high credit costs on private investment and ultimately stimulate economic activity.

Household structure decisions and positive wealth shocks: a natural experiment from the Spanish Christmas lottery

Abstract This paper explores whether a positive unexpected exogenous (unearned) wealth shock affects household structure decisions in different Spanish regions. The Christmas draw of the Spanish National Lottery is used in a natural experiment as a proxy for exogenous random variations in provincial wealth. A static and dynamic linear panel event-study design allows for control of changing economic and demographic conditions at the province level and the dynamic effects on the analyzed decisions. The evidence is consistent with families getting divorced and having children when the province in which they live experiences an unexpected increase in wealth, but no conclusive effect on wedding plans is found.

Investigating the effects of ICT, education, and R&D on economic efficiency and technology heterogeneity: A cross-country analysis

This study explores the impact of information and communication technology (ICT), education, and research and development (R&D) on countries' economic efficiency and technology heterogeneity. A panel of 52 countries, classified into developed (31 sample countries) and developing (21 sample countries) during 2011–2019, were the data sources for the analysis. We obtained relative country-level economic efficiency and technology gap inefficiency estimates from a novel Bayesian data envelopment analysis (DEA) approach. Bias-corrected estimates yielded by this technique have proven to be valid. We then regressed the estimates on ICT, education, and R&D proxy variables using a two-step and an iterative generalized method of moments (GMM) for linear dynamic panel data. Our analysis mitigates possible feedback effects between the explanatory and response variables, as well as possible endogeneity. The novelty of this work goes beyond the use of a new data analysis technique, investigating the impact of the three factors mentioned above and the country classification on technology heterogeneity caused by differences in countries' market structures, regulatory frameworks, economic and knowledge ecosystems, and cultures. Based on this study's findings, fixed broadband subscriptions have the most significant effect on economic efficiency improvement, while R&D is the main driver for reducing technology gap inefficiency. Specifically, ICT-facilitated knowledge spillovers within and across country groups through R&D cooperation play a significant positive role in closing the technology gap. This finding is consistent with the catch-up theory.

Allocating budget in developing countries, the need to fight corruption: evidence from Sub-Saharan African countries

This paper highlights the need to fight corruption in developing economies to ensure a better allocation of public resources in a context of institutional failure with the discretionary power of budgetary authorities. The study uses a panel of 48 Sub-Saharan African countries by combining several databases (WDI, WGI, SPEED BASE DATA and PWT), estimate by generalized moment method in system, the bias-corrected estimation linear dynamic panel data [6] and the type of error correction (Driscoll–Kraay). The results indicate that the phenomenon of corruption in the form of rent capture has two effects on public resources. One effect is linked to the level of public spending and the other to the distribution of public resources. Thus, corruption leads to an increase in the overall level of public spending. Corruption reduces spending on education, mining and communications, but increases spending on the military, health and transport. The study recommends that political leaders in developing countries strengthen and rigorously enforce anti-corruption laws, and raise public awareness of the underground economy.

Эконометрическое моделирование нелинейного влияния ипотечного кредитования на строительство жилья в российских регионах

This paper analyzes the impact of the mortgage lending market on housing construction in Russian regions. The study uses panel data from 83 Russian regions for 2005–2021 (excluding regions added to the Russian Federation since 2014). The research question that the study seeks to address is as follows: do mortgage loans always stimulate housing construction in Russian regions? The main hypothesis is that the impact of mortgage lending on housing construction varies depending on its level. A second hypothesis explores the specific impact of mortgage lending in resource-dependent regions. The study is based on data from the Federal State Statistics Service, the Central Bank of Russia, and the Agency for Housing Mortgage Lending. The primary method for analyzing the impact of mortgage lending was econometric modeling, including a random effects model, the Dynamic Threshold Panel model (accounting for dynamic relationships, threshold effects, and potential endogeneity), and the bias-corrected method of moments for linear dynamic panel data estimation. The analysis reveals a nonlinear effect of mortgage lending on housing construction. Specifically, before reaching a threshold value (62.6 thousand rubles per person), mortgage lending has a statistically significant positive effect on housing construction. After crossing this threshold, its impact becomes statistically significantly negative. The variable representing the region’s specialization in mineral extraction was found to be statistically insignificant. The results can inform the development and implementation of state strategies and national projects in housing and regional policy.

Electricity Fluctuations and Tax Revenue in Sub-Saharan Africa: Insights from a Bias-Corrected Linear Dynamic Panel Model

Inadequate electricity and its frequent fluctuations adversely affect the productivity and profits of small and medium enterprises in sub-Saharan Africa (SSA). These fluctuations also affect economic growth, narrowing further the region's low tax base. However, studies examining the effects of electricity on the tax base in SSA at the macro level are limited. This study bridges this gap by examining electricity fluctuations' effects on SSA countries' tax revenue. A bias-corrected linear dynamic estimator using a panel dataset for forty-one (41) SSA countries from 2000-2022 is employed for analysis. The study noted that electricity consumption is positively related to the tax base while electricity fluctuation creates critical fiscal losses regarding what the tax base would become in ordinary situations. The results indicate that the African governments in SSA need to increase investments in electricity infrastructures and diversify energy sources. Furthermore, SSA governments must renovate and strengthen the existing electricity infrastructures while upgrading the Internet of Things (IoTs) at the same time. Inclusively, mitigating power outages that are hindering the growth of the tax revenue base in SSA countries is important for achieving sustainable economic growth.

Governance and the Manufacturing Sector Growth among the BRICS Nations

The objective of this study was to examine the relationship between selected governance factors and growth rates in the manufacturing sector's output among the member states of BRICS. This study examined the institutionalized growth theory and explored four governance factors: government effectiveness, regulatory quality, control of corruption, and voice and accountability. The study also considered factors associated with both exogenous and endogenous growth theories. The estimation process involves applying the first difference generalized method of moments (D-GMM) on a linear dynamic panel model. The data spans from 2010 to 2021. The findings of this study suggest that among the BRICS nations, government effectiveness is the most significant predictor of growth in the manufacturing sector, out of the four governance factors that were examined. The factors of voice and accountability, control of corruption, and regulatory quality did not demonstrate the capacity to exert influence on variations in the growth of the manufacturing sector within the BRICS countries. Unlike prior studies, our research incorporates a range of established growth theories in constructing the empirical model. Additionally, we employ an instrumental variable approach for dynamic panel data analysis. We utilize robust standard errors to address potential issues of endogeneity and model misspecification. Therefore, BRICS countries should devote a sizeable portion of their resources to building solid mechanisms that make it easier for the implementation, oversight, and thorough reporting of government activities inside their manufacturing sector. This strategy could increase governmental effectiveness, which would encourage overall manufacturing sector growth.

Keeping Us Young? Grandchild Caregiving and Older Adults' Cognitive Functioning.

This study investigates longitudinal associations between providing care to grandchildren and cognitive functioning. It also examines heterogeneity in these relationships. Grandchild caregiving may support older adults' cognitive functioning by providing social engagement and emotional meaning. However, studies caution that time- intensive or custodial grandchild caregiving can take a toll on grandparents. The cognitive health implications of grandchild caregiving may thus depend on contexts including time spent providing care and living arrangements. They may also vary across sociodemographic groups and have greater effects on older adults who are more vulnerable to cognitive decline. Data came from the 1998-2016 waves of the Health and Retirement Study (HRS) and represented over 11,000 U.S. adults age 50+. Using linear growth curve and dynamic panel models, the analysis explored relationships between level of grandchild care and cognitive functioning over time and across sociodemographic, family, work and health characteristics. Those providing 100-199, 200-499 or 500+ hours of care to grandchildren had better cognitive functioning than non-caregivers regardless of whether they lived with grandchildren. Positive links between grandchild caregiving and cognition were stronger for lower income, non-working, and unpartnered adults and grew with age and functional limitations. These findings suggest that providing care to minor grandchildren may help support cognitive functioning as adults age. They also support the hypothesis that more vulnerable or isolated groups of older adults may benefit the most from grandchild caregiving.

Determinants of Strategic Management Accounting Information Disclosure under a Multi-Theoretical Framework: Evidence of Listed Firms on Ghana Stock Exchange

Sharing information is vital for decision-making as it helps mitigate risks by providing a wealth of relevant information. When the perceived risk is low, it ultimately reduces the costs associated with making a decision. Strategic Management Accounting Information is an important resource for decision-making. This study sought to identify the determinants of strategic management accounting information disclosure (SMAID) from multiple perspectives. The study used a non-experimental, quantitative correlational design to analyze 35 out of 36 firms listed on the Ghana Stock Exchange for a period between 2010 and 2019. The study employed a linear dynamic panel data model with a one-step system GMM. The model included lagged values of the dependent variable and accounted for unobserved panel-level effects. It was discovered that Board subcommittees have non-linear relationships with SMAID. The previous year's subcommittee negatively impacts SMAID, while the current year's has a positive influence. Past disclosures of strategic management and competitor accounting information have a positive impact on current SMAID. Past customer accounting information disclosures also positively influenced the current SMAID. The study reveals that past disclosures of strategic costing information positively and statistically affect current aggregate SMAID. It is recommended that firms establish effective board sub-committees that can provide oversight and guidance to the management team. Policymakers should consider enforcing the presence of such sub-committees to ensure high-quality and sufficient disclosure of SMAID. Maintaining a high level of SMAID from the previous year can positively impact the current year's SMAID, enabling firms to make better-informed decisions and enhance overall performance.

Islamic Trade Financing and Poverty Mitigation: An Econometric Estimation Informing Islamic Development Bank Member Countries Considering Their Entrepreneurial Ecosystems

This paper is an analysis of the empirical effect of entrepreneurial ecosystems on the relationship between Islamic Trade financing (TF) and poverty trends in the context of Islamic Development Bank (IsDB) member countries. The study is an empirical analysis seeking to find out whether there is a statistical effect of the entrepreneurial ecosystems, measured as Global Entrepreneurship Index (GEI) scores, on the relationship between the Islamic Trade Financing dollar amounts by the IsDB (TF) and the GNI Per Capita, PPP, of all Islamic Development Bank (IsDB) member countries for the years 2009 to 2019. The research is designed as a desk-top longitudinal, correlation, employing the linear dynamic panel data GMM model as an estimator of the empirical relationships between the key variables of the study. The study results show that there is a significant positive relationship between the TF dollar amounts from the IsDB and the GNI Per capita, PPP, and that the ascending entrepreneurial ecosystem positively affects this relationship in the IsDB member countries. Therefore, countries that receive higher Islamic Trade Financing dollar amounts from the IsDB (IF), generally have more GNI Per capita, PPP (less poverty) than their counterparts, but ascending entrepreneurial ecosystem levels raises this positive relationship. It is, therefore, recommendable for IsDB member countries and all other interested countries to formulate policies that facilitate Islamic Trade financing to mitigate poverty and improve their entrepreneurial ecosystems for economic progress. This paper develops policy conversations that guide political discourse on policy topics of poverty mitigation and their relation to financing trade following Islamic products and services, while improving the entrepreneurial environment, thus generating information on policy choices of an Islamic financing nature.

Economic freedom, inclusive growth, and financial development: A heterogeneous panel analysis of developing countries.

The effective and efficient management of financial systems and resources fosters a socioeconomic climate conducive to technological and innovative advancement, thereby fostering long-term economic growth. The study used panel data from 72 countries classified as less financially developed between 2009 and 2017 to examine the role of economic freedom and inclusive growth in financial development. For the long-run estimations, we utilised the linear dynamic panel GMM-IV estimator, panel corrected standard errors (PCSE) linear regression method, and contemporaneous correlation estimator, a generalised least squares method. Our analyses indicate that economic liberty, inclusive growth, and capital stock significantly contribute to financial development in a positive manner. Moreover, inclusive growth contributes positively to overall financial development by enhancing economic freedom. Regardless of exogenous and endogenous shocks, we found that the tax burden and investment freedom are negative drivers of financial development as measured by the overall financial development index. In contrast, protection of property rights, government spending, monetary freedom, and financial freedom are positive and significant drivers of economic growth.