Economic Policy Implications Research Articles

Interplay of Chinese rare earth elements supply and European clean energy transition: A geopolitical context analysis

The European clean energy sector sources approximately 98 % of its rare earth materials from China. We examine Chinese rare earth supply's effect on European renewable energy, particularly solar and wind sectors from 1990 to 2020. Using the gravity model, we find a positive correlation between China's rare earth supply and European solar energy during bullish markets. A similar response is seen in wind energy during bearish markets, considering global and China-specific geopolitical risks. We also observe a negative correlation between China's economic growth and mineral supply to Europe, with European income growth having no significant impact. Additionally, multiplicative economic growth negatively impacts Chinese mineral supply. The study also reveals a positive link between oil prices, rare earth export prices, geopolitical risks, and China's mineral exports. Distance negatively affects supply dynamics in the wind model but not in the solar model. However, the originality of this study lies in its examination of China's role as a rare earth supplier for Europe's clean energy transition, integrated into a gravity model. Significantly, this research provides potential trade insights and formulates an economic policy implication framework to guarantee a steady supply of China's rare earths for Europe's green deal objectives, while addressing the associated geopolitical risks.

An interdisciplinary analysis of Turkiye's space policy: An economic and political perspective

Turkiye has invested significantly in the development of its space policy in recent years. At its core, Turkiye's space policy aims to reduce the country's dependence on foreign technologies and develop national capabilities in related fields. However, it also has implications for national security, defense and political power. This study uniquely contributes to the literature by providing a comprehensive, interdisciplinary analysis of Turkiye's space policy, focusing on its economic and political dimensions. The study commences with a brief historical overview of Turkiye's space program, highlighting its evolution and strategic milestones. It then addresses the economic implications of Turkish space policy, including potential benefits and challenges for the country's macroeconomic and microeconomic environment. Finally, the study examines the political power dimensions of Turkiye's space policy, encompassing national security, defense, and geopolitical implications.Drawing on a range of sources, including government reports and academic articles, this research integrates the theoretical frameworks of Political Economy and International Relations to offer a multifaceted analysis. The findings indicate that, from an economic perspective, investment in the space program is expected to stimulate economic growth, create new industries and job opportunities, increase economic diversification, and lead to the development of human capital. The space program will spur technological advancements across various sectors, thereby enhancing efficiency and productivity. Furthermore, a successful space program will elevate the country's international prestige, attracting more investors, and expanding investment opportunities. From a political perspective, Turkiye is enhancing its launch capabilities and missile defense systems to bolster national security due to its geopolitical position. Turkiye's space policy is designed to position the country as a leading space power in the Middle East and beyond, thereby strengthening its strategic and diplomatic stance globally.This study provides critical policy recommendations to enhance the effectiveness and sustainability of Turkiye's space endeavors, emphasizing the importance of foundational investments in education, research, and international collaborations. The insights gained from this interdisciplinary approach are invaluable to policymakers and scholars, offering a holistic understanding of the economic and political ramifications of national space programs.

Combining Differential Equations with Stochastic for Economic Growth Models in Indonesia: A Comprehensive Literature Review

Economic growth modeling is one of the methods a government can use to formulate appropriate economic policies to improve the prosperity of its people. Differential equations and stochastic models play a major role in studying economic growth. This article aims to conduct a literature review on the use of differential equations in relation to stochastics to model economic growth. In addition, this article also discusses the use of differential and stochastic equations in economic growth models in Indonesia. This study involves searching for and selecting articles to obtain a collection of research works relevant to the application of differential and stochastic equations to economic growth models, supported by bibliometric analysis. The results of this literature review show that there is still little research discussing economic growth models using differential equations combined with stochastic models, especially those applied in Indonesia. While the application of these models remains relatively limited, their potential to offer deeper insights into the complex dynamics of economic growth is undeniable. By further developing and refining these models, we can gain a more comprehensive understanding of the factors driving growth and the potential implications of various economic policies. This will ultimately equip policy-makers with a more powerful analytical tool for making informed decisions.

Decomposing Supply‐ and Demand‐Driven Inflation

AbstractThe extent to which either supply or demand factors drive inflation has important implications for economic policy. I propose a framework to decompose inflation into supply‐ and demand‐driven components. I generate two new data series that quantify the degree to which either demand or supply is driving inflation in a current month. The demand‐driven contribution tends to decline during recessions, while the supply‐driven contribution tends to follow food and energy prices. Monetary policy tightening acts to reduce the demand‐driven contribution of inflation. Oil‐supply shocks act to increase the supply‐driven contribution, but decrease the demand‐driven contribution of inflation.

The State of the Art of Academic Research on Non-performing Loans: A Structured Literature Review

This study aims to conduct a Structured Literature Review (SLR) on Non-Performing Loans (NPLs), defined as distressed credits or deteriorated loans, to explore their historical developments and prospects. NPLs played a prominent role in the global financial landscape post the 2007 economic crisis and, nowadays, their volume is managed thanks to regulatory intervention. However, academic research on this topic is limited and sparse, particularly in relation to market volume and prices trend, as well as emerging management strategies and sustainability’s perspective. Therefore, our objective is to fill this gap and observe how the academic literature has responded to the development of this instrument. The SLR, and its associated bibliometric analysis, conducted using the Biblioshny package available on R-Studio, were performed on a sample of 1.236 academic documents (Articles, Book Chapters and Conference Papers) available on Scopus and published from 2010 to 2023. The sample, selected through a rigorous and validated screening procedure, was then studied across variables defined in the Analytical Framework: Topics, Research Methods, Research Area and Geographical Area. Based on this analysis, as explicitly stated in the findings section, we observe specific trending topics and geographical areas of study related to NPLs. This study not only helps fill a significant gap in academic literature concerning NPLs, but also provides important implications for financial practice and economic policy conducted by professionals, aiding in a better understanding of how to address and manage NPLs in various economic and geographical contexts. The originality of this research lies in its structured approach and use of bibliometric analysis, to examine a wide range of academic publications over an extended period, serving as a potential base for further insights and future studies.

Since the COVID-19 pandemic, approximately 90% of elective anesthetics have been ambulatory: A retrospective analysis of statewide data in Florida from 2010 through 2022

BackgroundWhen the vast majority (e.g., ≈90%) of a specialty's elective (scheduled) care is ambulatory (i.e., length of stay 0 or 1 night), the administrative, clinical, and economic policy implications are profound. We examined the progressive shift of elective anesthetics in Florida from inpatient to ambulatory, from the first quarter of 2010 through the fourth quarter of 2022. We were particularly interested in the most recent data following the lifting of COVID-19 restrictions on elective surgery in the state. MethodsThis retrospective cohort study included major therapeutic and major diagnostic procedures with >0 American Society of Anesthesiologists base units in the state of Florida inpatient and ambulatory surgery databases. The last 8 quarters of these operating room anesthetic data corresponded to the end of restrictions on elective surgery in Florida due to the COVID-19 pandemic. Our goal was to determine whether the overall mean percentage of cases with 0- or 1-day lengths of stay has reached 90% since the lifting of pandemic restrictions. Numbers of cases over periods of at least four weeks tend to follow normal distributions. Therefore, we analyzed the N = 8 quarters of cases from 2021 to 2022 using Student's t-test. The study was performed when there were N = 8 quarters available from the Florida healthcare databases. ResultsThere were overall 22,584,752 surgical cases studied. The percentages of elective anesthetics with length of stay ≤1-day increased progressively from 2010 through 2020. Among the eight successive quarters since the end of pandemic-related elective surgery restrictions, the percentage of elective cases with length of stay 0- or 1 day was stable, averaging 90% (95% two-sided confidence interval 89.4% to 90.3%). ConclusionSince the COVID-19 pandemic, the mean quarterly percentage of elective surgery cases with anesthesia in Florida that were ambulatory has been reliably ≈90%. Implications include value in expecting overnight post-anesthesia care unit stay in ambulatory surgery centers and scheduling and sequencing cases based on post-anesthesia care unit capacity. Furthermore, because the vast majority (i.e., ≈90%) of cases would be excluded (i.e., not involve hospital admission for at least 2 midnights), there is a minimal role that risk-adjusted hospital length of stay and mortality can have in evaluating anesthesia department overall quality and economic effectiveness.

Effect of Open Market Operations on Income Inequality

Inequality is particularly relevant for public debates on the disaggregate implications of economic policies since they might have distinct effects across different segments of the population. Impact of monetary easing on inequality have recently attracted increasing attention especially in developing countries. This article examined the effect of open market operations on income inequality in Kenya. A quantitative research design method was adopted. The study utilized a quantitative cross-sectional data from the Kenya Continuous Household Survey Programme (KCHSP) for the years 2020 and 2021. Stepwise regression, forward selection model was executed with a threshold of 0.2. Further, the study was supported by Permanent Income Hypothesis, Kuznets Hypothesis and the modernization theory. Income inequality, measured by the Gini coefficient, was the dependent variable. Open market operations (repo, and reverse repo) was the independent variable in the model. The male headed households had a Gini coefficient of 0.58 while a Gini coefficient of 0.59 was attributed to female headed households, across the 47 counties. The results showed that open market operations (reverse repo) had a coefficient of 0.022, p=0.026< 0.05 which was positive and statistically significant at 5% level. The findings indicate that in order to effectively manage income inequality in the country, policymakers should adopt an interdisciplinary and multifaceted approach. This approach should take into account the differential impacts of various policy instruments on income distribution, with a particular focus on demographic segmentation. Additionally, policymakers should combine careful adjustments to monetary policy with targeted social and fiscal measures. These measures should be continuously informed by rigorous data analysis, with the aim of fostering a more inclusive and equitable economy.

Globalization in a Covid-19 Afflicted World

This paper attempts to assess the impact that the current Covid-19 pandemic can exert on the globalization process. The pandemic crisis, which fully unfolded worldwide in March 2020, had dramatic consequences for the world population, some of which are of economic character. As some of the global value chains and international trade and investment relationships were destabilized or suspended, a legitimate question as to the possible developments of the globalization process arises. We commence with a multidimensional concept of globalization and its critical evaluation. Subsequently, three possible scenarios of pandemic-induced development are identified and explored: disrupted globalization, de-globalization and finally re-balanced globalization. The discussion of these scenarios also includes implications for economic policy.

Lebanon’s Economic Development Risk: Global Factors and Local Realities of the Shadow Economy Amid Financial Crisis

The shadow economy’s size and impact remain subjects of extensive research and debate, holding significant implications for economic policy and social welfare. In Lebanon, the ongoing crisis since 2019 has exacerbated severe economic challenges, with the national currency’s collapse, bank crisis, and foreign reserve deficits. The World Bank reports Lebanon’s financial deficit surpassed $72 billion, three times the GDP in 2021. Despite a drastic decline in GDP, imports have surged to near-pre-crisis levels, exacerbating economic woes and indicating a constant outflow of foreign currencies. Considering such contracting facts, this paper aims to investigate global factors influencing the shadow economy and discern their manifestations in Lebanon during financial crises. Our methodology involves a comprehensive literature review, alongside a case study approach specific to Lebanon. This dual-method strategy ensures a detailed understanding of the shadow economy’s impact and the development of actionable insights for policy and economic reform. Through this approach, we seek to contribute to a nuanced understanding of Lebanon’s economic landscape and provide valuable guidance for policy decisions aimed at reducing corruption, promoting transparency, and fostering a robust formal economy. The increase in the shadow economy raises the formal economy risk, as resources and activities diverted to informal channels hinder the growth and stability of the official economic sector. Although focusing on Lebanon, this analysis deepens the comprehension of the economic landscape and provides valuable guidance for policymakers, researchers, and stakeholders, aiming to address the root causes of informal economic activities and promote sustainable growth in developing countries in general.

The Russia-Ukraine conflict, soaring international energy prices, and implications for global economic policies

This study examines the economic impact of soaring international energy prices during the Russia-Ukraine conflict from February 23, 2022, to May 31, 2022. Notably, by applying a CGE model, this study offers insights into energy policies at both macroeconomic and industrial levels, emphasizing the model's utility in analyzing complex economic interactions under geopolitical stress. Findings indicate that: (1) Russia, a critical energy-producing country, faced severe economic setbacks due to sanctions, with its GDP contracting by 5.5 %, household income decreasing by 4 %, and consumer spending dropping by 3.5 %. This was accompanied by a significant reduction in domestic investment by 6 %, a decline in output by 5 %, and a decrease in societal welfare indicators. (2) Other energy-producing countries or regions, such as the Middle Eastern oil-producing countries, Australia, Canada, Mexico, and Southeast Asia, experienced economic benefits from the global energy market's “crowding-out effect.” These regions saw an increase in GDP ranging from 2 % to 4.5 %, output growth by 3 %–6 %, and household income and consumption improvements by approximately 3 %–5 %. However, these benefits were tempered by a 1 %–2.5 % decline in domestic investment due to rising local energy costs. (3) Developed and developing regions, suffered adverse impacts, including the US, UK, EU, Japan, China, South Asia, Middle Eastern non-oil-producing countries, and Africa. These regions reported a decrease in GDP by 0.5 %–3 %, a decline in household income by 2 %–4 %, and lower consumption rates by 1.5 %–3.5 %. The economic strain was further exacerbated by an inflation increase of up to 2 % across these economies. This research offers valuable insights for governments and policymakers globally to address the challenges posed by the Ukraine crisis-induced energy crisis, underscoring the need for strategic energy policy adjustments and economic resilience planning.

Analysis of Economic Freedom, Foreign Direct Investment, and Economic Growth

This research analyzes the relationship between economic freedom, foreign direct investment (FDI), and economic growth using the Vector Error Correction (VECM) model and the Granger causality test. Panel data from several free trade agreement countries in the Regional Comprehensive Economic Partnership (RPEC) for 1997 – 2022. VECM captures cointegration relationships and models short-term adjustments toward long-term balance. Meanwhile, the Granger causality test helps identify the direction of the causal relationship between economic freedom, FDI, and economic growth. Empirical results show a long-term but weak cointegration relationship between these variables in the short term. In addition, it was found that there is a two-way causality between economic freedom and economic growth, as well as between FDI and economic growth. These findings imply that policies encouraging economic freedom and attracting foreign investment can increase a country's economic growth. This research provides empirical insights into the important role of economic freedom and FDI in driving economic growth and related policy implications for creating an environment conducive to investment and sustainable economic growth.

Exchange Policy and Misalignments in Morocco: A Quantitative Analysis

The research examines the equilibrium exchange rate and misalignment quantifications for the case of Morocco over the period 1990-2022. Based on an econometric model developed by Edwards in 1994, fundamental variables such as productivity, foreign direct investment (FDI), inflation and the real interest rate (RIR) are analysed to estimate the equilibrium value of the real exchange rate (REER) of the Moroccan dirham. The results show a cointegration between the REER and the fundamental variables, indicating the existence of a long-term relationship. The analysis of misalignments reveals periods of overvaluation and undervaluation of the Moroccan dirham, influenced by economic factors and monetary policies. This study has important implications for economic and monetary policy in Morocco, particularly with regard to export competitiveness and macroeconomic stability.

Political Economy and MUI Fatwa No. 83 of 2023: Literature Review

This research is a literature review which aims to analyze the relationship between political economy and MUI Fatwa No. 83 of 2023. Through searching for the keywords "political economy" and "fatwa" using Google Scholar, various relevant journal articles and books were collected, mapped and analyzed. The research results show that MUI Fatwa No. 83 of 2023 has significant implications for economic policy in Indonesia, serving as an ethical and moral guide that influences regulations on sharia banking, halal investment, and other economic sectors. This fatwa emphasizes the importance of fair and sustainable economic practices in accordance with Islamic principles. The conclusions of this research confirm the crucial role of fatwas in shaping Indonesia's political-economic landscape and underscore the need for further research to explore their long-term impact.

An Ecofeminist Contribution to the Debates on the Neoextractivist Development Model in Latin America

This article presents a materialist ecofeminist critique of neoextractivism by highlighting its historical origins and elaborating its economic policy implications in Latin America. Three questions addressed are as follows: 1) How can materialist ecofeminism contribute to understanding the current dynamics of capitalist development in the Global South, 2) why (neo)extractivism hits women hardest, and 3) to what extent and how ecofeminist movements can shape a post-extractivist transition to a just and sustainable future. The article’s main argument is that exploitation and oppression in Latin America can be understood in terms of gender, race, and class and, therefore, require an intersectional analysis framework. Within this framework, post-extractivist alternatives in this region must incorporate an ecofeminist analysis to understand better how social expression systems (including sexism, white supremacy, and ecological crises) intersect and reinforce each other. In this framework, this study is intended to contribute to the growing literature and debate on the development and resistance dynamics of neoextractivism in Latin America, where long-standing racial and gender inequalities intersect with class inequalities.

Navigating the confluence of econometrics and data science: Implications for economic analysis and policy

This paper explores the transformative integration of econometrics and data science, a synergy poised to redefine empirical research within economics. By merging traditional econometric methods with advanced data science techniques, such as machine learning algorithms and big data analytics, this interdisciplinary approach enables a deeper, more nuanced understanding of complex economic phenomena. We delve into the theoretical foundations underlying this integration, highlighting how machine learning algorithms like random forests and neural networks complement conventional regression analysis, thereby enhancing model complexity and predictive accuracy. The paper further discusses methodological advancements, including handling high-dimensional data, incorporating unstructured data through natural language processing, and the evolution of model selection processes empowered by machine learning. Practical applications are thoroughly examined across three pivotal areas: economic forecasting and policy analysis, financial markets and risk management, and social economic analysis and public policy, showcasing the significant contributions of this convergence to economic forecasting, policy formulation, and the assessment of public interventions. This comprehensive exploration underscores the potential of combining econometrics and data science to offer more precise and actionable insights for policymakers, researchers, and practitioners in the field of economics.

Unraveling the impact of economic policy uncertainty on environmental efficiency: How do institutional quality and political orientation matter?

AbstractEconomic policy uncertainty significantly influences governmental decisions regarding environmental sustainability, particularly in CO2 emissions reduction efforts. This study examines the impact of economic policy uncertainty on environmental inefficiency across 136 emergent and non‐emerging countries from 1990 to 2018, using an unbalanced and heterogeneous sample. Additionally, we explore the moderating effects of institutional quality and political orientation on this relationship. Employing a directional distance function in a parametric context, our analysis reveals that economic policy uncertainty exacerbates environmental inefficiency. However, we find that institutional quality and political orientation act as important moderating factors, fostering greater environmental sustainability. Sensitivity analyses support these empirical findings, providing insights into potential implications for economic policy and guiding regulatory and policymaking efforts toward achieving enhanced environmental sustainability.

Exploring the Phillips Curve: Inflation and Unemployment Dynamics in Pakistan

Using a strict analytical framework, this study investigates the dynamic link between inflation and several macroeconomic variables (unemployment, crude oil prices, and nominal exchange rate) in Pakistan from 1991 to 2019. Utilizing a diverse array of statistical methodologies, including unit root analysis, cointegration analysis, and dynamic ordinary least squares (DOLS), we assess the applicability of the Phillips Curve theory in predicting fluctuations in inflation. According to our findings, Pakistan exhibited a steady Phillips Curve over the study period, with all models demonstrating good tracking performance of changes in inflation. Furthermore, the CUSUM and CUSUMsq tests validate the stability of our estimates. This analysis contributes to our understanding of Pakistani inflation dynamics and has implications for economic policy in the nation.

Dampak Globalisasi Ekonomi Terhadap Stabilitas Lembaga Keuangan Perbankan

Economic globalization has become one of the main distinctive features in the development of the world economy today. This phenomenon has a significant impact on various aspects of economic life, including the stability of banking financial institutions in developing countries. This study aims to investigate the impact of economic globalization on the stability of banking financial institutions using a case study approach in specific developing countries. Through in-depth analysis, this study will examine the factors affecting the stability of banking financial institutions in the face of economic globalization, as well as their implications for economic and financial policies. The results of this study are expected to provide valuable insights into the impact of economic globalization on the stability of banking financial institutions in developing countries. The practical implications of the research findings will be discussed in the context of economic and financial policy, with the aim of strengthening the financial system and increasing resilience to global market fluctuations

Financial Liberalization and Banking Risks in the Waemu Zone: Do Fintechs Matter?

This study aims to examine the role of fintech development in the relationship between financial liberalization and banking risks in WAEMU countries. To do this, we used macroeconomic data from WAEMU countries, except of Guinea Bissau, due to lack of data, over the period 2011-2021. Methodologically, we use the PCSE (Panel-Corrected Standard Error) method of Beck and Katz (1995). The results revealed that fintechs amplify the banking risk reduction effect of financial liberalization. In terms of economic policy implications, the study suggests that the authorities should step up the process of financial liberalization and pay particular attention to adequate regulation of fintechs.

Economic Implications of Government Flood Control Policy: A Case of Rice in Japan

Japan’s susceptibility to and severity of floods have necessitated flood control policies by the government. “Overflowing flood control”, in which the floods due to torrential rains are systematically diverted to agricultural lands in the upper to middle reaches, is one of them. More information is needed on the public assessment of the overflowing flood control policy, and this research seeks to bridge this gap. Data evaluating rice affected by the policy were collected from a random nth-price auction using a developed online system. The sample consisted of 47 consumers living in the downstream areas of the Edogawa River, one of Japan’s first-class, or prime, rivers. Data on their attitudes toward the policy were collected with a questionnaire. Multiple ordered probit models are used for regression analysis. The results show that the sample respondents were willing to pay an average of JPY 1578 for 5 kg of rice, slightly higher than the national average rice production cost, and that 36% of the sample agreed with the flood control policy, which is positively associated with large families or owning many assets.