Dynamic Panel Threshold Model Research Articles

How Government Corruption and Market Segmentation Affect Green Total Factor Energy Efficiency in the Post-COVID-19 Era: Evidence From China

Energy and environmental pollution have attracted wide attention, but few studies have been conducted on green total factor energy efficiency (GTFEE) from the perspective of government corruption and market segmentation. By using the panel data of 30 provinces in China for the period 2006 to 2017, this paper tests the relationship between government corruption, market segmentation, and GTFEE. Moreover, considering the threshold effect of government corruption and market segmentation on GTFEE, the system generalized method of moments and the dynamic threshold panel model are adopted to analyze the nonlinear relationship. The regression results indicate that government corruption significantly decreases GTFEE, and market segmentation also has a significant negative impact on GTFEE. Moreover, market segmentation exacerbates the negative impact of corruption on GTFEE. The more serious the government corruption, the more severe the inhibitory effect of market segmentation on GTFEE. Similarly, the higher degree of market segmentation can increase the restraining effect of corruption on GTFEE. The results are still valid after a series of robustness tests. This paper suggests that countries should adopt severe anti-corruption actions, speed up the process of regional integration, and provide a good institutional environment support for the improvement of GTFEE.

How are FDI and green recovery related in Southeast Asian economies?

This study is to examine how FDI and green economic growth are related in Southeast Asian economies. It also attempts to find out the role of fiscal policy development in the relationship between FDI and green growth in the economies of the region. For this purpose, a dynamic panel threshold model is used for the data over the period 2000–2018. The main results show that FDI has a positive impact on the progress of green growth in these economies, with a stronger impact in the group of Southeast Asian economies with high fiscal development. This result confirms the pollution halo hypothesis, which states that FDI can promote green growth in a country. Aligning economic priorities to improve green fiscal policies, reforming fiscal integration programs, planning for green job creation, and implementing policies to attract FDI are recommended as important policy implications over the COVID-19 period.

Bank credit and economic growth: A dynamic threshold panel model for ASEAN countries

While it is widely recognized that the development of a sound financial system may contribute to foster economic growth, the relation between economic growth and financial activities is complex. In this perspective, our contribution investigates the existence of threshold effects in the relationship between economic growth and bank credit. Our sample of ASEAN countries is examined over the period spanning from 1993 to 2019. We use the approach of Kremer et al. (2013) to estimate threshold effects in a dynamic panel where a group of explanatory variables can be endogenous. Our results confirm the vanishing effect of finance on economic growth. We found a threshold of 96.5% (significant at the 5% level) for the credit-to-GDP ratio, the threshold variable. In the short run, for observations inferior or equal to the threshold, the positive effect of bank credit expansion on economic growth is around 0.08 (significant at the 1% level). Whereas, for observations superior to the threshold, the positive effect of bank credit expansion on economic growth is around 0.01, but not significant. The role of exporting firms is essential in ASEAN countries as they are more export-oriented than other regions in the world economy. Our results may indicate that the beneficiary of the credit (firms versus households), the structural features (export-led growth), and the regional heterogeneity have to be considered in empirical investigations of threshold effects in the relation between economic growth and bank credit. This empirical evidence may help to formulate sound policy recommendations.

Threshold Effect of Macroeconomic Convergence Criteria on Real GDP Growth Rate within the East African Community

This study investigates how the thresholds set by the East African Monetary Committee (EAMC) have impacted the growth of the East African Countries (Kenya, Tanzania, Uganda, Rwanda, and Burundi). The analysis establishes the actual thresholds supported by a panel data model, running from 2005 to 2020, which are drawn from World Development Indicators data from the World Bank website. The actual thresholds obtained are compared to the thresholds adopted by EAMC. This data was analysed using a Dynamic Threshold Panel model; the results show a slight deviation of the actual (optimal) data thresholds from the thresholds adopted as the EAC criteria for the formation of a Monetary Union. Therefore, there is need to reconsider the thresholds criteria to enable them to become feasible for the member states to achieve so as to form the Monetary Union.

The Dynamic Panels With Threshold Effect of China's OFDI on Host Country Technological Progress

Using the dynamic panel threshold model and data of 41 countries along “the Belt and Road” from 2003 to 2017, this paper empirically tests the impact of China’s outward foreign direct investment (OFDI) on technological progress of these countries and its threshold effect. The results show that OFDI exerts different effects on technological progress of countries along the route within different thresholds range. Based on the classification of different country types, when FD is below than the threshold value, China’s OFDI in transitional and developing countries has no significant impact on their technological progress, while developed countries have a more significant positive correlation; other, when FD is higher than the threshold value, both types of countries are significantly positively correlated, and the coefficient is greater in developed countries than in transitional and developing countries. In further research, it is divided into two periods based on the time node of 2013.

How Environmental Regulation, Digital Development and Technological Innovation Affect China’s Green Economy Performance: Evidence from Dynamic Thresholds and System GMM Panel Data Approaches

Based on the background of China’s “carbon neutral” policy and the booming digitalization, how does environmental regulation affect green economy performance? The existing literature has studied the impact of energy consumption on green economic performance. However, the literature has ignored the impact of carbon dioxide emissions on China’s green economy performance. In this regard, this research uses the non-radial distance function (NDDF) to calculate the green economic performance of China’s prefecture-level cities, and uses the dynamic panel threshold model and the systematic GMM method to study the nonlinear impacts and mechanisms of environmental regulation, digital development, technological innovation, and industrial structure upgrade on green economic performance. The panel data set contains 228 Chinese cities from 2003 to 2019. The following findings are established: first, after adding carbon dioxide emissions to China’s green economy performance, the environmental performance was reduced, and the green economy performance was also reduced. Second, the impact of environmental regulations on green economic performance has a double-threshold effect, with threshold values of −0.267 and 3.602, and this double-threshold effect has temporal and regional heterogeneity. Third, environmental regulations of different intensities have a single-threshold effect between digital development, technological innovation, and industrial structure upgrade, with threshold values of 2.955, 3.957, and 2.249, respectively. Fourth, digital development, technological innovation, and industrial structure upgrade promote green economic performance. Fifth, environmental regulation acts on green economic performance through the transmission of digitalization, technological innovation, and industrial structure upgrade. Based on these empirical findings, this research suggests that Chinese local governments should appropriately increase the intensity of environmental regulations, strengthen the digital application and technological innovation, and promote the upgrading of industrial structure to achieve the improvement of urban green economic performance.

Institutional threshold in the nexus between financial openness and TFP in Africa: A dynamic panel analysis

The challenge of “growth without development” in most developing countries particularly in the African region has brought to fore the discussion of the effects of macroeconomic policies on the key determinants of growth, namely Total Factor Productivity (TFP). This study investigated the threshold or sustainable level of institutional development necessary for financial openness to stimulate TFP growth by employing a Dynamic Panel Threshold Model (DPTM) for the panel of 28 selected African countries from 1996 to 2019. The findings showed that there exists a threshold or sustainable level of institutional development (4.73 out of 10-points scale) which African countries must attain to reap the full benefits of financial openness in terms of TFP growth because the quality of institutions in most African countries are pervasively weak and poorly developed to checkmate excesses, corruptions and political interferences in the financial markets. Therefore, the study recommended that there should be a deliberate attempt by relevant authorities to block all inherent loopholes in the institutional settings of African countries which give room for shady dealings in the financial markets, to ensure institutional environments (political, legal, regulatory, and economic institutions) are healthy enough to absorb the negative influence or the risks associated with financial openness that may hinder growth and development in the long-run by hindering TFP growth. • Interconnectedness of the world economy has moved financial openness to the limelight of academic discourse. • TFP describes the variable that accounts for change in output that does not depend on factor inputs such as labour and capital. • Financial openness is the integration of the financial activities and transactions into global financial markets. • Benefits of financial openness cannot be internalized to improve TFP without good quality institutions. • Threshold or sustainable level of institutional development in Africa. • Dynamic Panel Threshold Model (DPTM) proposed by Seo and Shin (2016) and used by Seo et al. (2019)

The Link between Economic Growth and Sustainable Energy in G7-Countries and E7-Countries: Evidence from a Dynamic Panel Threshold Model

The Link between Economic Growth and Sustainable Energy in G7-Countries and E7-Countries: Evidence from a Dynamic Panel Threshold Model

The nexus between tourism and regional real growth: dynamic panel threshold testing

This study analyzes the nexus between tourism and regional real growth for European regions at the Nomenclature of territorial units for statistics (NUTS), level 2, for the period 1995-2019. The study uses the dynamic panel threshold model to analyze complex relations between variables. As the dependent variable, we chose real growth rate of regional gross value added at basic prices by NUTS 2 regions. The independent variable is regional arrivals at tourist accommodation, while the control variables are health, household income, and employment at NUTS 2 regional level. The study found the threshold variable for 95% confidence interval. The marginal effects in the low inflation regime are higher compared to marginal effects in the high inflation regime. The study results support tourism-led growth hypothesis, indicating tourism as a one of the main drivers of regional growth. This research contributes to rare literature in application of dynamic panel threshold model in tourism. As an implication, this study can be used as a methodological approach to analyze the impact of different variables (not only tourism, but also innovations, technology, well-being, etc.) on regional growth, especially in countries with high regional differences, such as the Commonwealth of Independent States (CIS), Latin America, etc.

Do human capital development and globalization matter for productivity growth? New Evidence from Africa

African countries have demonstrated the weakest economic performance relative to other regions of the world as a result of underutilized capital structure despite being more integrated into the world economy since early 1990, thus, this study explores the linkages among globalization, human capital development, and productivity growth in Africa from 1990 to 2019. We employ Dumitrescu–Hurlin non-causality test, Cross-sectionally Augmented Autoregressive Distributed Lag (CS-ARDL), and Dynamic Panel Threshold model to find a bidirectional causality between human capital development and productivity growth. The result of CS-ARDL shows that globalization has a significant positive effect on productivity growth in the long run, while human capital has insignificant positive effects on productivity growth in both the short and long run. Also, we find that the threshold of human capital is 45.07%, and at any level beneath this threshold value, human capital and globalization impede productivity growth in Africa. The study concludes that the relationship between globalization, human capital development, and productivity growth is nonlinear and conditional on a certain level of human capital before the full benefit of globalization can be reaped in terms of productivity growth in Africa. Therefore, we recommend that the interdisciplinary policymakers should promote human capital development policies that conform to the rising population growth in Africa and take serious caution while making policies regarding globalization.

Energy technology of conservation versus substitution and energy intensity in China

A major challenge for sustainable development is providing adequate energy services while mitigating adverse environmental effects, which unquestionably requires a reduction in the energy consumed per unit of real GDP (i.e. energy intensity) and novel energy technologies. However, our knowledge of how energy technologies influence energy intensity is incomplete. This paper thus empirically investigates the effects of energy technologies on energy intensity by dividing them into energy-conservation and energy-substitution technologies. Additionally, we classify energy technologies according to their executors, as having two purposes. Using a China's provincial dataset over 2000–2018, we find that energy-conservation technology plays a more important role in decreasing energy intensity compared to energy-substitution technology. In addition, from the purposes of these energy technologies, the energy technologies coming from utility-type enterprises exert the most significant effect on energy intensity reduction. Since the effect of energy technologies on energy intensity may be related to technology absorptive ability, an additional analysis based on the dynamic panel threshold model indicates that technology absorptive ability shows an important effect on energy intensity.

Energy–Growth Nexus in the MENA Region: A Dynamic Panel Threshold Estimation

This study provides new evidence regarding the nonlinear relationship between energy consumption and economic growth in the Middle East and North Africa (MENA) region for the 1990–2014 period. The empirical estimation is conducted using a dynamic panel threshold model. We found one threshold in the relationship between energy consumption and economic growth and one threshold in the relationship between carbon dioxide (CO2) emissions and economic growth. The results indicate that energy consumption positively and significantly affects economic growth in the low energy consumption regime. In contrast, it has a negative and significant impact on economic growth in the high energy consumption regime. Moreover, CO2 emissions are positively and significantly related to economic growth in the low regime of CO2 emissions. Nevertheless, the relationship between CO2 emissions and economic growth in the high CO2 emissions regime is negative and significant. Therefore, policymakers should implement other effective energy policies, such as stricter regulations on CO2 emissions, increase energy efficiency, and replace fossil fuels with cleaner energy sources to avoid unnecessary CO2 emissions and combat global warming. Future studies should identify the root causes of failures and issues in real time for inflation and link the energy–growth nexus to achieving the 2030 Sustainable Development Goals (SDGs) Agenda, Goal 7: Affordable and Clean Energy.

International Trade as a Double-Edged Sword: The Perspective of Carbon Emissions

Due to the rapid growth of fossil energy consumption, countries worldwide have paid considerable attention to reducing carbon emissions. Moreover, with economic globalization and trade liberalization, exploring the relationship between foreign trade and carbon emission reduction has become increasingly critical. Exploring this relationship can aid in establishing suitable recommendations for global carbon emission reductions. This paper uses a spatial econometric model and a dynamic panel threshold model to empirically test the spatial effect, nonlinear effect, and heterogeneous effect of foreign trade on global carbon emissions. All the above models are based on the construction of the economic weight matrix of different countries. The results reveal that 1) carbon emissions in various countries exhibit with significant spatial spillover in the overall spatial context; 2) foreign trade has a significant role in promoting carbon emissions in local and similar economic areas, but it has an apparent dual-threshold effect on economic development; and 3) there are significant differences in the impact of foreign trade on carbon emissions in different regions and different periods. Therefore, in the process of global economic integration, based on their development stages and comparative advantages, countries can focus on overall planning and coordination to promote the optimal allocation of resources and reduce carbon emissions.

Towards the environmentally friendly manufacturing industry–the role of infrastructure

Infrastructure development and the green transition of manufacturing are two crucial issues concerning the national economy and people's livelihood. However, not many literatures discuss the influencing mechanism connecting the two. This paper starts from a new research perspective of infrastructure development and explores the potential ways to improve manufacturing's ETFP. The empirical results indicate that the infrastructure development has indeed improved the green development level (GDL) of manufacturing. This impact is heterogeneous in terms of different infrastructure types and planning periods. Besides, the completed infrastructure helps the formation of an environmentally friendly development model, while the new infrastructure investment could generate negative environmental externalities. Through mechanism analysis, we found that infrastructure mainly promotes the GDL through the two tracks: scale effect and energy structure adjustment. The technological progress and industrial structure adjustment did not play the expected mediating impact. The dynamic panel threshold model results proved that with the expansion of the scale effect and the optimization of energy consumption structure, the role of infrastructure in promoting the manufacturing's GDL could be stronger. Some policy recommendations are proposed to provide a reference for the infrastructure programming and the green transformation in the manufacturing industry.

Asymmetric effects of China’s tourism on the economy at the city level: a moderating role of spatial disparities in top level tourist attractions

ABSTRACT This study complements the tourism literature by proposing an asymmetrical effect of the tourism-led growth hypothesis on the city-level economy using panel data from 331 cities in China from 2004 to 2015 (3,972 observations). The results, based on an augmented Solow model and the system-generalized method of moments (GMM), reveal that the impact of tourism on city-level economic growth is indeed asymmetric and heterogeneous, depending on the presence of top-level attractions (TL), which are proxied by the World Heritage Sites or AAAAA (5A) scenic spots. The dynamic panel threshold model’s results also corroborate the asymmetric threshold effect of tourism on city-level economic growth. Tourism, in particular, has facilitated positive and significant economic growth in cities with TL but has had an uncertain and statistically insignificant impact on cities without it. The findings indicate that the validity of tourism-led growth depends on the availability and number of TL in each city, which serve as a moderator. As a result, we confirm tourism’s asymmetric effect and spatial heterogeneity on urban economic growth.

The impact of R & D elements flow and government intervention on China’s hi-tech industry innovation ability

ABSTRACT Despite the established correlation between research and development (R&D) investment and innovation capability, the correlation between China’s hi-tech industry R&D elements flow and its innovation capability remains unclear. This thesis aims to investigate the correlation between R&D elements flow and China’s hi-tech industries’ innovation ability by using appropriate spatial econometric methods and dynamic threshold panel model on account of the panel data of 30 hi-tech industries in Mainland China during 2004–2016. The estimation results of the spatial autoregressive model revealed that China’s hi-tech industry innovation capability exerted significant spatial correlation and spatial spillover effects. However, the hi-tech industry innovation capability in the surrounding areas exerted a significant reverse spatial spillover effect on this area. Both R&D personnel flow and R&D capital flow have significantly promoted China’s hi-tech industry innovation capabilities in recent years. Government intervention exerted a significant opposite regulatory impact on the correlation between R&D factor flow and innovation capability of China’s hi-tech industries. Furthermore, the estimation results of the dynamic threshold panel model revealed that nonlinear impacts of R&D personnel flow and R&D capital flow on innovation ability of China’s hi-tech industries depended on the specific level of government intervention.

Is there a nonlinear relationship between financial development and income inequality in Africa? Evidence from dynamic panel threshold

Using dynamic panel threshold model, this work examines the nonlinear relationship between financial development and inequality in Africa. The study introduces a robust measure of financial development into the literature. Using 40 African countries selected from high-income, middle-low and low-income countries, the study tests the new financial development indicator. The empirical results validate the existence of threshold levels of financial development that addresses inequality among African countries. Aggregately, financial development tends to promote inequality in high-income countries and reduces the same in low and middle-income countries. Hence, policymakers, in African countries, should be aware of the threshold level of financial development that imparts income inequality. Also, for financial development to have an enormous impact on inequality, all financial development pillars of depth, stability, access and efficiency must be simultaneously accorded a due place in policymaking by practitioners.

Nonlinear impacts of information and communications technology investment on industrial structure upgrading: the role of marketization

ABSTRACT This paper employs the dynamic panel threshold model to estimate the industrial upgrading effect of information and communications technology (ICT) investment in view of the role of marketization. Based on provincial-level data from 2008 to 2016 in China, the empirical results show that under a better institutional environment of marketization, ICT investment has an increasing marginal effect on the upgrading of the industrial structure. This implies that the diminishing marginal effect of ICT investment is compensated by the promotion of marketization. Overall, with higher-quality development of the market economy, ICT investment will play a more active role in upgrading the industrial structure.

Trade openness and green total factor productivity: testing the role of environment regulation based on dynamic panel threshold model

Trade openness and green total factor productivity: testing the role of environment regulation based on dynamic panel threshold model

The effect of energy patents on China's carbon emissions: Evidence from the STIRPAT model

China has been the world's largest carbon emitter since 2009. Thus, there is considerable pressure on it to control its carbon emissions. Technological progress is a factor that most influences the reduction of carbon emissions. Unlike existing literature, this study narrows the technological progress to the energy field and focuses specifically on energy patents. Additionally, as there is significant heterogeneity among different types of energy patents, we classify them based on performers and purposes. Conventional estimators including Driscoll and Kraay, fixed effects with instrumental variables, and difference generalised method of moments are applied to estimate the effect of energy patents on carbon emissions which was based on the stochastic impact by regression on population, affluence, and technology (STIRPAT) model. The results indicate that energy patents are not a powerful instrument for controlling carbon emissions. However, energy patents originating from enterprises and scientific institutions exert a positive effect in reducing carbon emissions, and energy patents originating from higher education institutions enhance these effects. The utility type of energy patents significantly reduces carbon emissions, but the creation type offsets this positive effect. Further, the dynamic panel threshold model is employed in which human capital is incorporated as the threshold variable. The estimates indicate that carbon emissions can be positively reduced by increasing the level of human capital.