Econometric Estimation Research Articles

Towards the vision of going green in South Asian region: The role of technological innovations, renewable energy and natural resources in ecological footprint during globalization mode

In order to achieve the objectives of 27th Paris Climate Conference (COP-27), this study aims to inspect the multifaceted interaction between natural resources, technological innovation, forest area, globalization, renewable energy, and ecological footprint of six South Asian countries from 1990 to 2020 of diminishing carbon emissions and encourage ecological sustainability. The long-term experiential estimations estimated from the battery of second-generation methods, which tackled other econometric estimation problems such as heterogeneity and cross-sectional dependency. The empirical outcomes discovered that natural resources and globalization process in South Asian region significantly increase the level of ecological footprint in the long-run. Conversely, technological innovations, forest area, and renewable energy upsurge environmental sustainability by reducing ecological footprint in the and long-run. Moreover, the interaction of natural resources with technological innovation, forest area, and renewable energy also adds in curtailing the level of ecological footprint and aid in achieving Sustainable Development Goals (SDGs) 13. Based on the estimated findings, substantial policy recommendations are suggested like improving the extraction of natural resources, promoting energy efficiency, investment in energy technologies, and increasing the deployment of renewable energy sources to increase technological invention and achieve the goal of a net-zero-emissions.

An economic analysis of the impact of the Russian War in Ukraine on the Poland-U.S. trade

This research article examines the economic analysis of the influence of the Russian war in Ukraine on Poland and U.S. trade. The study employs a combination of quantitative and qualitative research methods to investigate the impact of the conflict on trade dynamics between the two countries. The quantitative analysis utilizes trade data, including import and export volumes, trade balances, trade flows, and economic output from 2003 to 2022 using TradeMap data. Descriptive and various econometric estimations were estimated. The qualitative analysis involves the evaluation of policy responses, trade strategies, and business decisions made in response to the conflict. The results indicate a rise in Polish exports to the U.S., but dominated by specific products. This research contributes to a comprehensive understanding of how the Russian war in Ukraine has affected Poland's trade with the U.S., provides valuable insights into the economic consequences of the conflict, and identifies potential avenues for future trade cooperation between Poland and the U.S.

Environmental consequences of trade-induced uncertainty: Evidence from econometric estimation

Trade uncertainty reverberates through financial markets and leaves an indelible mark on environmental quality, compelling us to address the intricate interaction between trade policies and ecological sustainability. The priority purpose of our research is to analyze how trade uncertainty affects the environmental quality in the top ten polluted nations (Indonesia, Russia, Japan, Brazil, China, Germany, USA, France, India, and Mexico). While previous analyses have primarily trusted panel data procedures to assess the attachment between trade uncertainty and environmental quality, they have often failed to consider how this relationship varies across different countries. In contrast, the current study takes a novel approach by employing the 'Quantile-on-Quantile' method to evaluate this correlation separately for each country. This innovative method allows for a more accurate analysis, providing a comprehensive worldwide view and tailored insights for each nation. The results reveal a significant improvement in environmental quality resulting from trade uncertainty across different quantile intervals. Additionally, the findings of this study underscore the diversity in the connections between these factors among various nations. These outcomes underscore the need for policymakers to conduct comprehensive evaluations and implement effective strategies addressing trade uncertainty and environmental quality.

An Econometric estimation of the determinants of red meat consumption in Egypt

An Econometric estimation of the determinants of red meat consumption in Egypt

“Mother's milk”: Is there a social reversal in breastfeeding practices along with economic development?

Previous studies suggest that macro- and micro-level factors jointly influence breastfeeding (BF) practices, but empirical evidence on the dynamics of such interactions along with the process of a country's economic development remains limited. Based on 42 Demographic Health Surveys (DHS) conducted in 15 Asian countries with a large time window (1990–2017), we thus test the existence of a reversal in the association between household wealth and BF practices throughout the development process. Four BF indicators (early initiation of BF, exclusive BF, continued BF at one year and two years) are examined, along with a standardized asset-based household wealth index allowing for cross-wave and cross-country comparisons. To highlight the dynamics of the wealth-BF association, we carry out econometric estimations, including interaction terms between household wealth and the country's level of economic development (low, medium, and high) or time. Instrumental variable estimations are also performed to limit suspected endogeneity issues. Our results confirm a transition in the wealth gradient of exclusive BF and continued BF in Asian countries. More precisely, while these practices are pro-poor in the poorest countries of the sample, they progressively spread to wealthier households along with the level of economic development. For exclusive BF, this transition has resulted in a reversal of the wealth gradient at the end of the period (i.e., exclusive BF prevalence among the rich overpassing that of the poor). We fail, however, to observe this kind of transition for early initiation of BF, this practice remaining pro-poor, whatever the level of economic development. To sum up, our results provide robust evidence of a transition in the wealth gradient of some BF practices along with economic development and time, and thus largely echo the literature exploring the social reversal hypothesis in the case of non-communicable diseases.

Is there a virtuous cycle between wages and productivity? Turkish experience after the transition to democracy

We analyze the behavior of plant-level real wages and productivity in Turkish manufacturing after the transition to democracy in 1987 and test for the direction of the causality between these two variables. The Turkish experience is almost an experimental case because successive governments after 1987 let real wages increase rapidly under the pressure of intensifying political competition. Real wages in state-owned enterprises increased by nearly 200% from 1988 to 1993, followed by a 130% increase in real wages in private manufacturing. Our analysis shows that labor and total factor productivity increased at an unprecedented rate during the same period in response to the exogenous wage hikes. Econometric estimates provide strong empirical evidence supporting the hypothesis that there is a bi-directional relationship between wages and productivity, and wage increases do not reduce surplus because the increase in productivity (value added per worker) compensates for increasing wages.

Financial development and renewable energy deployment in sub-Saharan African countries

Purpose The underdevelopment of the financial sector could be one of the barriers to the deployment of renewable energies in developing countries. The purpose of this paper is therefore to analyse the effect of financial development in the deployment of renewable energies in sub-Saharan African countries. Design/methodology/approach The empirical analysis is based on a production approach and a cross-sectionally augmented autoregressive distributive lag error correction model estimate for 25 sub-Saharan African countries over the period 1990–2018. The augmented mean group (AMG) and common correlated effects mean group (CCEMG) estimators were used for the robustness analysis. Findings Two results emerge: financial development contributes positively to renewable energy deployment in sub-Saharan African countries in the short and long run; and fossil fuel dependence impedes significantly renewable energy deployment in the short and long run. The robustness analyses using the AMG and CCEMG methods confirm these results. Practical implications These results suggest the need for policies to support and strengthen the development of the financial sector to improve its ability to effectively finance investments in renewable energy technologies. Originality The originality of this paper lies in the fact that the analysis is based on a renewable energy production approach. Indeed, the level of renewable energy deployment is measured by the production and not the consumption of renewable energy, unlike other previous work. In addition, this research uses recent econometric estimation techniques that overcome the problems of cross-sectional dependence and slope heterogeneity.

Regional Employment Implications of U.S. Pharmaceutical Exports

ABSTRACT We develop an industry-specific sub-national model of exports that takes into account international and domestic shipping costs. We generate econometric estimates of these shipping costs for the U.S. pharmaceutical and medicine manufacturing industry by fitting the model to 2017 U.S. export data at the district level. Then, we use the econometric model to estimate the value of exports originating from production in each state. Our estimates of states’ export intensities provide indicators of the exposure of workers in individual states to pharmaceuticals-related changes in patent protection, tariffs, and macroeconomic conditions in export markets.

Dynamic Impact of Inflation and Exchange Rate in Indonesia's Top 10 Market Capitalization Companies: Implications for Stock Prices

Macroeconomic factors are widely believed to have a crucial role in affecting a company's financial health and, ultimately, its stock price. The study addresses this important issue by investigating the long-term impact of inflation and exchange rates on firm stock prices. This study adopts both panel and cross-firm modeling, along with a dynamic approach, which no prior study has ever conducted in Indonesia’s top 10 market capitalization companies. It utilizes monthly data spanning from September 2008 to August 2023. To generate insights into long-term effects, the study applies the Dynamic Ordinary Least Squares (DOLS) method, with a robustness check using the Fully-Modified Ordinary Least Squares (FMOLS) method. The econometric estimations yield results that are consistent with the hypotheses, indicating that the rise in inflation levels has a negative effect, while the strengthening of the domestic currency in exchange rates positively influences firm stock prices in the long term. This implies that investors should carefully assess and navigate inflationary environments, consider diversifying their portfolios across industries and international markets, and maintain a long-term perspective when making investment decisions in the unique context of Indonesia's market landscape.

Heterogeneous impact of green energy innovation on energy transition in the G7 nations: an aggregated and disintegrated analysis through advanced quantile approach

ABSTRACT The G7 nations is a major global consumers of natural resources and energy. These nations are confronted with substantial obstacles in their pursuit of sustainable growth through energy transition, while upholding their status as global economic leaders. As a result, this current study conducted an aggregated and disintegrating analysis on the heterogeneous role of green energy innovation on energy transition in G7 nations. Green energy innovation was disintegrated into hydro, solar and wind energy. Moreover, the heterogeneous effects of green innovation in solar, hydro and wind on energy transition was investigated, an analysis that has not been previously examined. For the econometric estimation, we adopted the Quantile-on-Quantile Regression (QQR) and the quantile causality method. The results of the QQR indicates that the positive role of green energy innovation on energy transition in all of the G7 nations. However, this positive role is more dominant in five G7 nations, namely Italy, Germany, Japan, the UK and the USA. Additionally, the result also highlights that the connection between green energy innovation and energy transition is differs across the various quantiles for different nations. Moreover, the quantile causality analysis indicates that green energy innovation has the potential to predict future values in energy transition within the G7 nations. The study emphasizes various policy considerations for promoting energy transition through green energy innovation in G7 nation, which help realizing sustainable development.

Emerging trends of green hydrogen and sustainable environment in the case of Australia.

The world faces immense pressure regarding the negative impacts of increased greenhouse gas emissions, climate change, global warming, droughts, and many other environmental problems. Australia is also facing the same issues and requires urgent attention. In this research, we have examined the effect of hydrogen firms on Australia's greenhouse gas emissions. We employed the monthly data from January 2002 to December 2021 for econometric estimations. Through quantile regression, it is noted that the expansion of hydrogen firms contributes to environmental pollution instead of controlling the emissions. Most hydrogen energy still emits carbon dioxide, which contributes to climate change. Around the world, carbon-containing fossil fuels produce more than 95% of hydrogen energy. However, as a policy suggestion, it is recommended that green hydrogen produced by electrolysis of water using renewable energy sources will succeed in achieving the Sustainable Development Goals (SDGs).

Temperature impact on the economic growth effect: method development and model performance evaluation with subnational data in China

Temperature-economic growth relationships are computed to quantify the impact of climate change on the economy. However, model performance and differences of predictions among research complicate the use of climate econometric estimation. Machine learning methods provide an alternative that might improve the predictive effects. However, time series and extrapolation issues constrain methods such as random forests. We apply a simple thought experiment with national marginal GDP growth by aggregating subnational climate impact to alleviate the shortcomings in random forests. This paper uses random forests, multivariate cubic regression, and linear spline regression to examine the direct impacts of temperature on economic development and conducts a performance comparison of the methods. The model results indicate an optimal temperature of 15°C, 15°C or 21°C for each model. Furthermore, a thought experiment indicates that the marginal predictions of national GDP changes by approximately 1%, −3%, or −6% for models with 1°C warming. The performance comparison suggests that random forests have stable model performance and better prediction performance in bootstrapping. However, the extrapolation problem in random forests causes underestimation of climate impact in 5% of cells under 6°C warming. Overall, our results suggest that temperature should be considered in economic projections under climate change scenarios. We also suggest the use of more machine learning methods in climate impact assessment.

Parental international migration and health of children left-behind: evidence from an Asian economy

PurposeThere is a considerable gap in the literature examining the effect of parental international migration on children’s health in Pakistan. The author aims to examine the impact of parental international labour migration on the health (anthropometric measures) of children left-behind in Pakistan.Design/methodology/approachThe author investigates the impact of parental international labour migration on the health (anthropometric measures) of children left-behind in Pakistan using econometric estimation techniques and the latest wave of the Pakistan Demographic and Health Survey 2017–2018. The main child health measures the author uses include weight-for-age (WAZ) and height-for-age (HAZ) Z-scores for children under five years of age. Since unobservable factors may be vital determinants of the child nutrition outcomes, the author uses two unique instrumental variables to address the potential endogeneity problem.FindingsThe author finds that international migration improves the left-behind children’s weight-for-age and height-for-age nutritional outcomes, generating essential policy insights.Originality/valueTo the best of the auhtor’s knowledge, no previous study has been conducted on parental migration and left-behind children in Pakistan using the latest Demographic and Health Survey.

Revisiting coffee replacement decisions in the aftermath of the 2012-2013 coffee rust event in Nicaragua

This article quantifies the partial effect of different coffee leaf rust infestation levels on the intensity of coffee replacement area. The analysis is made for the agricultural cycle 2012-13 by employing the 2012-13 Coffee Production Survey of the Ministry of Agriculture of Nicaragua. By means of econometric estimates, farmers coffee renewal decisions are described as a function of coffee leaf rust infestation. The results are further contrasted to the developments of coffee grown area since 2012. A significant and positive relationship is found between different levels of coffee infested area and farmers coffee replacement expectations. The results help to improve the understanding of i) the demand for re-investments, ii) farmer's entrepreneurial behavior and iii) re-investments constraints after low probability of occurrence agricultural shocks.

Is fiscal deficit ‘curse’ or ‘haven’ for environmental quality in India? Empirical investigation employing battery of distinct ARDL approaches

Undoubtedly, throughout the past half-century, environmental quality has emerged as a significant obstacle to both economic and social endeavors. Recent local and international policy debates have focused on environmental deterioration and global warming, but how governments balance economic growth and environmental sustainability is still enigmatic. For this reason, we have examined the determinants of environmental quality in India from 1972 to 2021. More specifically, we have investigated whether the fiscal deficit is ‘curse’ or ‘haven’ for environmental quality (CO2) in India. Moreover, this study deliberated four other predictors, comprising technological development (TIN), fossil fuel consumption (FFC), urbanization (Ub), and human capital index (HCI). In order to attain this objective, a range of econometric estimation techniques are employed to ensure the validity and reliability of the outcomes. For instance, we have employed a battery of ARDL approaches, such as standard ARDL, nonlinear ARDL, and multiple threshold NARDL approaches. In light of our research findings, we will be focusing directly on the examination of the NARDL and MTNARDL outcomes. This is due to the empirical evidence indicating the existence of asymmetric effects resulting from FD on CO2 emissions in India. The NARDL approach reveals that the consequence of fiscal deterioration is more pronounced, and the influence of fiscal progress is mild in terms of CO2 emission growth. Further, the outcomes of the MTNARDL approach revealed that the size of the extremely low changes in FD is much higher than the extremely high changes in FD in both models. This implies that as the FD rises, CO2 ascends more significantly, and when the FD lowers, CO2 declines progressively. In a nutshell, FD has a long-run positive and asymmetric impact on CO2 in India; thus, we may conclude that FD is considered the ‘curse’ for CO2 in India. Furthermore, TIN, HCI, and Ub have detrimental effects on CO2, whereas FFC stimulates CO2 in India. This research work provides some important policy implications for environmentalists, economists and macroeconomic policymakers to promote a green and healthy environment.

Empowering Progress: Education, innovations and financial development in the battle against energy poverty

Energy poverty affects numerous policy areas, such as health care, inequality and employment. So, it is considered multidimensional and is not easily determined by a single factor. As such, the study constructs a composite index of energy poverty (EPI), engaging multiple indicators based on their logical relevance from the literature. Adopting EPI as the dependent variable, the study discovers the theoretical links between various factors of education, financial development, and technological innovations in EPI between 2000 & 2018 for a global panel of 77 countries. To this end, robust econometric estimators “Continuously Updated and Fully Modified (CupFM) and Continuously Updated and Bias Corrected (CupBC)”, along with the Generalized Method of Moment (GMM), are applied. The estimates imply that education in all its forms is conducive to reducing energy poverty. In line with education, technological innovations and economic growth are explored to be the drivers of reducing energy poverty in these countries. However, financial development and infant mortality increase energy poverty. A feedback hypothesis is explored between technological innovations, financial development and infant mortality, whereas education forms a one-way causal link with energy poverty. These results implicate to support of energy education programs and authenticate financial incentives and rebates on taxes given to those who develop low-carbon technologies.

Charting a Sustainable Future: The Impact of Economic Policy, Environmental Taxation, Innovation, and Natural Resources on Clean Energy Consumption

Energy availability especially that derived from renewable sources has sustainable effects on economic progress and environmental rectifications. However, using clean energy in the energy mix has been influenced by several macro fundamentals. The motivation of this study is to gauge the impact of uncertainties, environmental restrictions and innovation on clean energy consumption for the period 1997–2021 by employing the new econometric estimation techniques commonly known as CUP-FM and CUP-BC. Referring to the preliminary assessment with the slope of homogeneity, cross-sectional dependency and panel cointegration test, it is unveiled that research variables have exposed heterogeneity prosperities, cross-sectional dependence, and long-run association in the empirical equation. According to the empirical model output with CUP-FM and CUP-BC, EPU has a native statistically significant connection to clean energy consumption. At the same time, environmental taxation and technological innovation have had beneficial effects on clean energy development. Additionally, the nonlinear estimation disclosed asymmetric linkage between explanatory and explained variables in the long and short run. Directional causality revealed a feedback hypothesis explaining the relationship between EPU, TI and clean energy consumption. The study has offered policy suggestions based on the findings for future development.

Achieving sustainable environment through infrastructure and energy structure developments: empirical evidence from BRICS.

The development of an environment that is sustainable requires infrastructure matching this goal. Moreover, it is almost impossible to achieve this goal without the requisite energy structure. Devising an energy structure that is both effective and efficient must precede the desired infrastructure to achieve sustainability goals. Therefore, it is important to look into the nexus of energy structure, infrastructure, and carbon emissions in "Brazil, Russia, India, China, and South Africa (BRICS)" countries under the growth and environment hypothesis. To empirically estimate the said nexus, robust econometric techniques are adopted. This paper employs panel data analysis techniques to investigate the relationship between infrastructure, energy consumption, and carbon emissions in the BRICS countries. The econometric estimation methodology includes a cross-sectional dependence test, unit root attribute of the panel data using the cross-sectionally augmented Im Pesaran and Shin(CIPS) test, and estimation of co-integration among the variables, and to address the issues in the panel data, augmented mean group (AMG) technique and common correlated effects mean group (CCEMG) estimator were employed. Findings suggest the existence of a supportive role of infrastructure and energy structure in abating carbon emissions. It is suggested that the BRICS economies need to enhance their investment in infrastructure and energy structure for them to create a sustainable environment. Findings are also robust to short- and long-run policy implications. This study is a step forward toward the Sustainable Development Goals (SDGs).

Analyses of unintended consequences of IAS 12 on deferred income taxes

PurposeAn intractable effect of revenue and expense recognition based on tax regulation and accounting rules is unresolved and may be manageable only by reducing the value of deferred taxes. Therefore, in this study, the authors examined the relationship between the International Accounting Standard 12 (IAS 12) and deferred income taxes associated with tax and accounting rules.Design/methodology/approachThe authors used a large sample of balanced data from 144 firms across 1992–2019. To mitigate the problem of superfluous results, the authors used the same number of firms and years for pre- and post-IAS 12 periods. The authors employed robust econometric estimations to establish the impact of IAS 12 on deferred tax.FindingsThe regression results show that deferred tax assets decreased significantly, whereas deferred tax liabilities increased significantly, in the post-IAS 12 period. These contrasting results imply that IAS 12 implementation has increased conservatism and prudence in financial reporting. However, the authors find that the increase in deferred tax assets post-IAS 12 is value destructive, suggesting that its implementation has unintended consequences. The results are robust to alternative measurements and econometric identification strategies.Originality/valueWhile prior studies have explored topics such as deferred tax measurement and the impact of income and expense recognition, the authors specifically analyzed how IAS 12 affects deferred taxes and their effect on the market valuation. The authors find that certain accounting standards may not be relevant to the capital market.

Synerging Sustainable Development Goals-can clean energy (green) deliver UN-SDG geared towards socio-economic-environment objectives in emerging BRICS?

The BRICS nations are often seen as being at the vanguard of the push to implement sustainable energy technologies, even at the household scale, as part of the transition to sustainable societies. Given that the Sustainable Development Goals (SDGs) are interconnected and that achieving one is a good springboard for achieving others, we see the SDGs as having three dimensions: socio-economic-environmental sustainability. However, energy is central to attaining these tenets in the UN-SDG. Therefore, this work aims to use three germane methods-feasible generalized least square (FGLS), fixed effects model, and quantile regression-to discover empirical evidence to back up these statements. When different econometric estimate methods were used, these findings remained reliable. The research also showed that clean energy is essential when determining strategies to achieve environmental sustainability, human development, and foster green economic growth. Thus, investments in green resources and technological innovation promote the country's transition to sustainable development. They also show a substantial beneficial influence of clean and green energy and technology on supporting the main tenet of UN-SDG in BRICS across most quantiles. As a result of these major analytical findings, some relevant policies are proposed to enable the BRICS countries to achieve some of the United Nations Sustainable Development Goals that are closely related to undergoing green energy transition (SDG-7) and achieving environmental sustainability (SDG-13) through the channel of innovation (SDG-9). The study consequently suggests that to combat climate change, promote green economic growth, and assure human development, which will increase the likelihood of the UN-SDGs, investment in clean energy should be given top priority on the BRICS agenda.