Short-run Impact Research Articles

Is terrorism a real threat to tourism development? Analysis of inbound and domestic tourist arrivals in Turkey

ABSTRACT This study estimates the long-run and short-run impact of terrorist incidents on inbound and domestic tourist arrivals in Turkey by using a non-linear autoregressive lag (NARDL) model for the period between 2007 and 2016. The results reveal unidirectional nonlinear relationships from terrorism to tourism in both the long-run and short run. Inbound and domestic tourists show different respond towards an increase or decrease in terrorist incidents. The findings are expected to help tourism management, planning, and forecasting regarding greater economic benefits for the country. We suggest that improving security measures and effective safety procedures in tourist areas can reduce terrorist incidents in the future.

Modelling Economic Growth, Carbon Emissions, and Fossil Fuel Consumption in China: Cointegration and Multivariate Causality.

Most authors apply the Granger causality-VECM (vector error correction model), and Toda–Yamamoto procedures to investigate the relationships among fossil fuel consumption, emissions, and economic growth, though they ignore the group joint effects and nonlinear behaviour among the variables. In order to circumvent the limitations and bridge the gap in the literature, this paper combines cointegration and linear and nonlinear Granger causality in multivariate settings to investigate the long-run equilibrium, short-run impact, and dynamic causality relationships among economic growth, emissions, and fossil fuel consumption in China from 1965–2016. Using the combination of the newly developed econometric techniques, we obtain many novel empirical findings that are useful for policy makers. For example, cointegration and causality analysis imply that increasing emissions not only leads to immediate economic growth, but also future economic growth, both linearly and nonlinearly. In addition, the findings from cointegration and causality analysis in multivariate settings do not support the argument that reducing emissions and/or fossil fuel consumption does not lead to a slowdown in economic growth in China. The novel empirical findings are useful for policy makers in relation to fossil fuel consumption, emissions, and economic growth. Using the novel findings, governments can make better decisions regarding energy conservation and emission reductions policies without undermining the pace of economic growth in the long run.

Impacts of the El Niño-Southern Oscillation (ENSO) on Paddy Production in Southeast Asia

ABSTRACT Stronger intensity and frequent arrival of the El Niño- Southern Oscillation (ENSO) caused varied temperature and wildly varying precipitation with drought and flood conditions that threaten paddy production. Using the Pooled Mean Group estimation method, this study investigates the long run and short run relationship of ENSO impact on Southeast Asia paddy production from 1961 to 2014 with Oceanic Niño Index, Niño 3.4 sea surface temperature anomalies, Southern Oscillation Index and Multivariate ENSO Index. This study also investigates four different ENSO intensities with Multivariate ENSO Index to determine their long run and short run impact on paddy production. The findings reveal that the ENSO effect is exclusively captured by Multivariate ENSO Index among four climate change variables. Furthermore, ENSO arrival during the paddy planting season caused a paddy reduction in the long run. Specifically, the arrival of a moderate La Niña during the paddy planting season has a greater impact on paddy reduction in the long run compared to a strong El Niño. In addition, moderate and strong La Niña caused higher paddy production in the short run. Further research can be carried out by including spatial and temporal ENSO impacts on paddy planting season with single cultivation method.

Do GDP and Energy Consumption Increase CO2 Emissions? An Analysis of Brazil, India and China

This study analyses the short and long run impact of trade, energy consumption and CO2 emissions on economic growth in Brazil, India and China. The time series considered is from the period of 1978-2014. By employing ARDL bound testing approach, the long and short run effects are estimated. With Error Correction model, the findings provide that there is a short run relationship between energy and export, leading to CO2 emissions in China, there is no significant relationship between the variables and CO2 emissions in India and a short run relationship between CO2 emission and energy consumption in Brazil. The study implies that policy makers in China need to give special attention for energy sector and non-convertible energy in export sector for reduction in CO2 emissions. In India, it is essential to consider other factors that are responsible for CO2 emissions in the country. And in Brazil, the results suggest an inefficiency of the use of energy and that export oriented industries in Brazil have been diverted to convertible or renewable energy sources. DOI : 10.7176/JETP/9-7-03 Publication date :October 31 st 2019

FOREIGN INVESTMENT INFLOWS AND THE STRUGGLE FOR A RENEWED ECONOMIC GROWTH IN NIGERIA: AN ECONOMETRIC STUDY

This study attempts to find answer to the question of whether Nigeria should intensify effort to draw home more foreign investment; would more of foreign investment inflows accelerate Nigeria economic performance? Methodologically, annual time series data from 1986 to 2018 was analyzed using ARDL approach. The key findings are that, although FDI has long-run positive impact on economic growth, FPI has no operational effect on the growth; this is true of FPI both in the long-run and short-run. Furthermore, labour force and trade openness were found to have long-run and short-run positive impact on growth. Hence, government must tactically open up economy to trans-border trade, increase labour supply and intensify effort to attract more FDI.

Untangling the nonlinear “knots” of UK’s housing prices

PurposeHousing prices in the UK offer an inspiring, yet a complex and under-explored research area. The purpose of this paper is to investigate the critical factors that affect UK’s housing prices.Design/methodology/approachThe authors utilize the recently developed nonlinear ARDL approach of Shin et al. (2014) over the period 1969–2016.FindingsThe authors find that both the long-run and short-run impact of the price-to-rent (PTR) ratio and credit-to-GDP ratio on house prices (HP) is asymmetric whilst ambiguous results are established for mortgage rates, industrial production and equities. Apart from the novel framework of analysis, this study also establishes a positive association between HP and the PTR ratio which suggests a speculative behaviour and could imply the formation of a housing bubble.Originality/valueIt is the first study for the UK housing market that explores the underlying fundamental relationships by looking at nonlinearities hence, allowing HP to be tied by asymmetric relationships in the long as well as in the short run. Modelling the inherent nonlinearities enhances significantly the understanding of UK housing market which can prove useful for policymaking and forecasting purposes.

The macroeconomic drivers of stock market development: evidence from Hong Kong

PurposeThe purpose of this paper is to examine the macroeconomic drivers of stock market development in Hong Kong during the period 1992Q4-2016Q3. Specifically, it investigates the impact of banking sector development, economic growth, inflation rate, exchange rate, trade openness and stock market liquidity on stock market development.Design/methodology/approachThis paper uses quarterly time-series data covering the period 1992Q4-2016Q3, which have been obtained from various reliable sources. The study uses the autoregressive distributed lag bounds testing procedure to identify both the long- and short-run macroeconomic drivers of stock market development in Hong Kong.FindingsWe find that banking sector development and economic growth have positive impacts on stock market development, whereas the inflation rate and the exchange rate have negative impacts on stock market development both in the long and short run. In addition, the results show that trade openness has a positive long-run impact but a negative short-run impact on stock market development.Originality/valueDespite the phenomenal growth of stock market in Hong Kong, there are, to the best of the authors’ knowledge, no relevant studies on the macroeconomic drivers of stock market development in Hong Kong. Therefore, this paper endeavours to enrich the literature by examining the macroeconomic drivers of stock market development in Hong Kong during the period 1992Q4-2016Q3.

Asymmetric cointegration and the J-curve: evidence from commodity trade between Turkey and EU

In this paper, we assess the asymmetric effects of exchange rate changes on the trade balance of 57 industries that trade between Turkey and EU. Since the analysis introduces nonlinear adjustment of the exchange rate, we find results that are different than previous research. More precisely, we find short-run asymmetry effects in all industries, short run adjustment asymmetry in 24 industries, short-run impact asymmetry in 17 industries, and long-run asymmetry effects in 23 industries. Small and large industries seem to be subject to the same asymmetry effects.

The effectiveness of government expenditure on economic growth in Botswana

PurposeThe purpose of this paper is to examine the relationship between government expenditure and economic growth in Botswana over the period 1985‒2016. The study employed the auto-regressive distributed lag (ARDL) bounds testing approach in investigating the nexus. The study makes the argument that the effectiveness of public spending should be assessed not only against the amount of the expenditure but also by the type of the expenditure. The empirical findings showed that aggregate expenditure has a negative short-run and positive long-run effect on economic growth. When expenditure is disaggregated, both forms of expenditures have a positive short-run effect on economic growth, whereas only a long-run positive impact of recurrent expenditure is observed. The study suggests the need to prioritize scarce resources in productive recurrent and development spending that enables increased productivity.Design/methodology/approachThis study examined the effectiveness of government spending in Botswana, within an ARDL framework from 1985 to 2016. To achieve this, the analysis is carried out on both an aggregate and disaggregated level. Government spending is divided into recurrent and development expenditures.FindingsThis study examined the effectiveness of government spending in Botswana, within an ARDL framework from 1985 to 2016. To achieve this, the analysis hinged on both the aggregate and disaggregated levels. The results of the aggregate analysis suggest that total public expenditure has a negative impact on economic growth in the short run; however, its impact becomes positive over the long run. On disaggregating government spending, the results show that both recurrent and development expenditures have a significant positive short-run impact on growth; however, in the long run, the significant positive impact is only observed for recurrent expenditure.Practical implicationsThe results provide evidence of the diverse effects of government expenditure in the country. In the period under investigation, 73 percent of total government expenditure in Botswana was recurrent in nature, whereas 23 percent was related to development. From the results, it can be observed that although the recurrent expenditure has contributed to increased growth and must be encouraged, it is also pertinent for the Botswana Government to endeavor to place more emphasis on productive development expenditure in order to enhance short- and long-term growth. Further, there is a need to strengthen the growth-enhancing structures and to prioritize the scarce economic resources toward productive spending and ensuring continued proper governance over such expenditures.Originality/valueThe study provides empirical evidence on the effectiveness of government spending in a small open, resource-reliant middle-income SSA economy and argues that the effectiveness of public spending must be assessed not only against the amount of the expenditure but also on the type or composition of the expenditure. The study contributes to the scant empirical literature on Botswana by employing the ARDL approach to cointegration technique in estimating the long- and short-run impact of government expenditure on economic growth between 1985 and 2016.

Impact of terrorism on stock markets across the world and stock returns

Purpose The purpose of this paper is to study the following: short-run and long-run associations between the terror-affected country’s stock market index and other global countries’ equity indices and gold; the volatility of stock market indices when one of the countries is affected by a terrorist attack; and the linkages between terrorism and the returns in the selected stock markets. Design/methodology/approach To study the impact of the Taj attack on other global indices, the authors selected top five countries’ stock market indices, namely, FTSE, DJI, NIKKEI, SSEC and DAX. The short-run and long-run associations are also compared with gold. The authors used the autoregressive distributed lag model, LM test and bounds test for analyzing the short-run and long-run impact; ARCH family models to study the volatility impact; and the MAR model to study the impact on returns. Findings The authors found that all the global indices had a short-run association with the terror-affected country’s benchmark index, i.e. BSE. Gold moved as expected, with it having a short-run impact on the terror-affected country. All the global indices except DJI have volatility of share price movement either positively or negatively. As the benchmark of the terror-affected country fell, NIKKEI, HSI, IXIC, DAX and CAC also fell; that is, it had a positive influence on the terror-affected country’s index. Post the Mumbai attacks, DJI, NIKKEI, SSEC, DAX, BSE and CAC performed well in performance measure returns compared with the pre-attack period. Whereas, FTSE and GOLD performed well in performance measure returns in the pre-attack period compared with the post-attack period. GOLD proved that it is the best avenue to invest in, as it has only a short-term association with the terror-affected country’s index. Research limitations/implications The authors studied the short-run and long-run associations with only five countries’ benchmark indices. Practical implications The authors found that all the global indices had long- and short-run associations with the terror-affected country’s benchmark index, i.e. BSE. Global indices like DJI, NIKKEI, SSEC, DAX and FTSE had a short-term association with the affected country’s index. Gold moved as expected, with it having a short-run impact on the terror-affected country. All the global indices except DJI have volatility of share price movement either positively or negatively. As the benchmark of the terror-affected country fell, NIKKEI, HSI, IXIC, DAX, TSX, BVSP and CAC also fell; i.e., it had a positive influence on the terror-affected country’s index. Post the Mumbai attacks, DJI, NIKKEI, SSEC, DAX, BSE and CAC performed well in performance measure returns compared with the pre-attack period. Whereas, FTSE and GOLD performed well in performance measure returns in the pre-attack period compared with the post-attack period. GOLD proved that it is the best avenue to invest in, as it has only a short-term association with the terror-affected country’s index. In all the relationships were mixed with respect to terror attacks, and GOLD took the lead run out of all the associations it had in the 16-year time span from 2000 to 2016. Social implications The research has got an important implication to the investors. It shows that patience is the key, as all the indices had only short-term associations with the BSE. It implies that investors’ returns will be negative in the short run, but if they continue investing, in the long run, the impact of terrorism tapers out and the returns will increase. Originality/value There is a lot of research done on the impact of the US attacks on the stock markets of other countries, but on the impact of the Taj attack in India, there is hardly any research.

Do Health Insurance Mandates Spillover to Education? Evidence from Michigan's Autism Insurance Mandate

Social programs and mandates are usually studied in isolation, but interaction effects could create spillovers to other public goods. We examine how health insurance coverage affects the education of students with Autism Spectrum Disorder (ASD) in the context of state-mandated private therapy coverage. Since Medicaid benefits under the mandate were far weaker than under private insurance, we proxy for Medicaid ineligibility and estimate effects via triple-differences. While we find little change in ASD identification, the mandate crowds-out special education supports for students with ASD by shifting students to less restrictive environments and reducing the use of ASD specialized teacher consultants. A lack of short-run impact on achievement supports our interpretation of the service reductions as crowd-out and indicates that the shift does not academically harm students with ASD.

Globalisation as a motor of renewable energy development in Latin America countries

The impact of globalisation on the dissemination of renewable energy was analysed for ten Latin America countries for the period from 1980 to 2014. For that propose, was built a model where install capacity of renewable energy is explained by output, KOF globalisation index, and private capital stock. The richness of the short- and long-run relations between variables was analysed by a panel autoregressive-distributed lag model in the form of an unrestricted error correction mechanism. The results of the model’s estimation support a positive effect of the short-run impact of output per capita and long-run elasticities of globalisation and private capital stock per capita on renewable energy diffusion. That results that show that the globalisation can stimulate renewable energy sources evidencing that the process of integration of Latin America countries in the World is a benefit to the development of green energy technologies. The Latin America region policymakers must take advantage of the process of globalisation to reduce the costs of renewable energy technologies and develop policies encouraging the access of these technologies by households with low income that live in remote or rural regions to reduce the energy poverty, which plagues the countries from the Latin America region.

The Impact of the German Minimum Wage on Individual Wages and Monthly Earnings

AbstractThis paper evaluates the short-run impact of the introduction of a statutory minimum wage in Germany on the hourly wages and monthly earnings of workers targeted by the reform. We first provide detailed descriptive evidence of changes to the wage structure in particular at the bottom of the distribution and distinguish between trends for regularly employed and marginally employed workers. In the causal analysis, we then employ a differential trend adjusted difference-in-differences (DTADD) strategy to identify the extent to which these changes in wages and earnings can be attributed to the minimum wage introduction. We find that the minimum wage introduction can account for hourly wage growth in the order of roughly 6.5 % or€\euro0.45/hour and an increase in monthly earnings of 6.6 % or€\euro53/month. Despite finding wage growth at the bottom of the distribution, the paper documents widespread non-compliance with the mandated wage floor of€\euro8.50/hour.

The impact of infrastructure development on economic growth in sub-Saharan Africa with special focus on Ghana

PurposeThis paper aims to assess the impact of infrastructure development on Ghana’s economic growth.Design/methodology/approachUsing data obtained from the World Bank’s World Development Indicators, the United States’ (US) International Energy Statistics and the Central Intelligence Agency’s (CIA) Factbooks from 1980 to 2016, an autoregressive distributed lag (ARDL) framework is used to determine the long- and short-run impact of the selected infrastructure stock and quality indices on Ghana’s economic growth.FindingsFindings indicate a statistically significant relationship between infrastructure development and economic growth. Additionally, electricity-generating capacity is identified as the infrastructure stock index that has the greatest positive impact on Ghana’s economic growth. The study reveals that electricity-distribution loss has a significant negative effect over both long- and short-run periods.Research limitations/implicationsCommercial petroleum export from Ghana since 2010 has been a key contributor to economic growth. Although its aggregate effect is included in the annual GDP figures adopted for the study, the authors would have wished to assess its impact on GDP as an independent standard growth determinant. However, because of a lack of available data over this study period, petroleum exports could not be adopted as an independent standard growth determinant. Additionally, an aggregated index of infrastructure stock and quality could not be derived because of the small size of data available. Hence, this study did not assess its impact on Ghana’s economic growth.Practical implicationsThe research provides pragmatic guidance to policymakers to focus their efforts on expanding electricity-generating capacity while simultaneously taking steps to curb electricity transmission and distribution losses. These two related actions offer the greatest positive impact on infrastructure development and, as a consequence, Ghana’s economic growth.Originality/valueThis paper represents the first attempt to empirically study the relationship between infrastructure development and Ghana’s economic growth. A key contribution to the existing body of knowledge includes strong evidence of a positive effect of infrastructure development upon Ghana’s economic growth. Results also reveal that the greatest positive impact on economic growth is derived from electricity-generation capacity. However, the study also uncovers a negative, but statistically significant, relationship between road and economic growth.

The Impacts of Private Banks on Economic Growth in Ethiopia

An improvement in nation’s economic growth is contributed by major functions of private Banks such as deposit mobilization, giving credit to entrepreneurs, financing investment and foreign currency purchase and remittances. However, it is adversely affected due to an increasing amount of Banks non-performing loans in the long run. The studies that had been conducted on the banking sector focused on the general policy, capacity, the Bank performance and quality of service on customer satisfaction. Hence the objectives the study was to examined the short and long run impact of private Banks on economic growth in Ethiopia. The time series data which covering 1994/95 to 2015/16 from National Bank of Ethiopia was analyzed by employing VECM by using e-views software. The result indicates that deposit mobilization, investment, foreign remittance and purchase have positive and significant relationship with GDP with the coefficients of 0.8096, 0.1052 and 0.0297 respectively. The coefficients imply that for one unit rise in deposit mobilization of private Banks causes an increase of GDP by 0.8096 units, for one unit rise in investment of private Banks cause an increase in GDP by 0.1052 units and for one unit rise in foreign remittance and purchase of private Banks cause an increase in GDP by 0.0297 units respectively. Therefore, private Banks are playing indispensable role on the economic growth in Ethiopia by performing their primary functions in the economic activities. Hence, to accelerate economic growth, Banks should collect deposit from every corner of the country so as to finance larger investment projects. Keywords : economic growth, private Banks, deposit, investment, VECM DOI : 10.7176/JESD/10-11-06 Publication date :June 30 th 2019

Does financial and agriculture sector development reduce unemployment rates? Evidence from Southern African countries

The paper examines empirically the impacts of agricultural sector value added and financial development on unemployment, using yearly data from 1995–2015. Eleven developing Southern African Development Community countries were selected for the study. The empirical analysis was carried out using second-generation econometric methods. The regression results revealed that both agricultural value added and financial development are important determinants of unemployment within the region. The results specifically show that agricultural value added is negatively associated with unemployment in both the short and long-run, although the long-run effect is many times bigger than the short-run impact. The results also show that in the long-run, both financial depth and financial efficiency are negatively associated with unemployment. Interactions between agricultural value added financial development and unemployment were further tested via panel bootstrap causality tests. The causality test results revealed the existence of significant one-way causality from agricultural value added to unemployment and from financial depth to unemployment for the region. It also showed that causality varies across individual countries within the region with different conditions, indicating the heterogeneous nature of the countries that make up the regional bloc.<br />

How Does Dependency Ratio Affect Economic Growth In the Long Run? Evidence from Selected Asian Countries

It has been widely accepted that the structure of population of a country can have significant contribution towards its growth effort. With the proportional increase of relatively older group of people in developed countries alongside the proportional rise of the youth population in the developing part of the world, it is of paramount importance to understand the long term economic consequences of this changed structure of population. Despite having a favorable demographic composition, depending on public investment and policy strategy adopted, economies differ in terms of their ability to attain demographic dividend. The issue is therefore an empirical one which requires appropriate quantitative analysis. Against this backdrop, with the help of a 37-year long panel of 15 Asian countries, this study has made an attempt to understand the long run effect of changing demographic pattern on economic growth of Asian countries. Despite increased importance of demographic composition on labor supply, asset accumulation, savings, hence on the overall growth process, there is no literature focusing on the relationship from a cross-country perspective and while applying suitable methodological tools. Thus, this paper utilized econometric methods of panel data constructed using World Development Indicators (WDI) and Health Nutrition and Population Statistics (HNPS) from World Bank database to understand the linkage between dependency ratio and per capita GDP growth. Following cross section dependence test stationarity property of the variables has been diagnosed employing appropriate panel unit root tests. The short run and long run parameters have estimated with the help of Mean Group (MG), Pooled Mean Group (PMG) and Dynamic Fixed Effect (DFE) estimators. PMG estimates have been preferred over the DFE and MG. It revealed the fact that for the Asian countries Dependency Ratio (DR) does not have any short run impact on Per Capita GDP Growth (PCGDPG) but it has significant long run impact therefore with an increase in working age population in comparison to the non-working group, there is a resulting increase in per capita GDP growth of Asian countries. Since changed demographic composition can only result in higher economic growth, if complemented by effective public policies, this paper provides empirical evidences in favor of such policies of human resource development. Besides, in order to reap the maximum benefit from working age population while increasing investment, it is important to engage them in productive, growth enhancing activities and that requires investment in employment generation.

THE DYNAMIC CORRELATION BETWEEN FISCAL SPENDING ON EDUCATION, HEALTH, CONSUMPTION AND STANDARD OF LIVING IN NIGERIA

The fiscal spending of the government have always been a strong instrument towards achieving development and recovering economy from recession. This paper investigates the long run and short run impact of three component of government expenditure (education, health, and consumption expenditure) on standard of living in Nigeria with time series data from 1981 to 2017. The study employs ordinary least square method of estimation on a range of equation models: Vector Error Correction Model (VECM) and the Impulse Responses Function Model. The result shows that fiscal spending on education, health, and consumption have a long run relationship with standard of living in Nigeria and the speed of adjustment towards long –run equilibrium is 61.45%, moderately high. The short run coefficient results reveals that education expenditure in both lag 1 &2 have a positive and significant impact on standard of living while health and consumption expenditure have insignificant impact on standard of living in Nigeria. Using Impulse Response Function model, we found that none of our fiscal spending variables (education expenditure, health and consumer spending) were able to emit positive impulses/shocks on the standard of living in Nigeria. The study recommends that government should ensure that fiscal spending on education, health, and consumption should be well managed, accounted for and the method should be transparent to the populace.

EVIDENCE OF AN ASYMMETRIC IMPACT OF THE DEVALUATION OF CURRENCY ON INFLATION:

The research is aimed at evaluating the existence of asymmetry or otherwise of the impact of devaluation of currency on inflation in Malaysia for the period 1970 – 2017. Non-linear autoregressive distributed lag model (NARDL) was used as the evaluation econometric tool of the research. The findings of the study reveal that devaluation of currency has an inflationary impact in both short run and long run. Whereas, revaluation of currency does not have any impact neither in the short run nor in the long run. This confirms the upward flexibility of the impact of the increases in the changes in the exchange rate on inflation at the same time reaffirms its rigidity downward.

Short-Term Impact of Income on Cognitive Function: Evidence From a Sample of Mexican Older Adults.

Objective: To estimate the short-run (6-9 months) impact and mediating mechanisms of an intervention providing supplemental income to individuals 70 years and above from the Mexican state of Yucatan on markers of cognitive functioning (immediate and delayed word recall). Method: Regression-adjusted difference-in-differences (DID) analysis using baseline and follow-up data collected at treatment and control sites from an experiment. Results: The intervention improved immediate and delayed recall scores for men and women. We found no effects on diagnoses of dementia risk factors, depression, and activities of daily living (ADLs). The intervention increased health care use and decreased anemia for men and women, and improved food availability for men. The effects on cognitive outcomes were mediated by health care use for both men and women, and food availability for men. Discussion: In low- and middle-income countries, supplemental income for elderly may be an effective strategy to improve cognitive function by increasing food security and health care utilization.