Investment Expenditures Research Articles

Does climate policy uncertainty impair or improve corporate investment efficiency?

Climate policy uncertainty (CPU) has been a topical issue given its widespread impacts, but its effect on corporate investment efficiency is arguable. Based on a sample of Chinese listed firms, we find that higher CPU results in lower investment levels while higher investment sensitivity to investment opportunities. This suggests that CPU improves investment efficiency by pushing firms to reduce investment expenditures and align their investment decisions more in line with investment opportunities. We name this finding as the pushback effect of CPU and find that it is more pronounced for firms with overinvestment or tight financial conditions.

Macroeconomic Determinants of Foreign Direct Investment Inflow in Laos

This study aims to study macroeconomic determinants of foreign direct investment inflow in Lao PDR, which includes macroeconomic variables such as gross domestic product growth rate (GDPGRO), government investment spending (GI), exchange rate (EXR), inflation rate (IFR), interest rate (IR), openness trade (OPTR) and money supply (MS) from 2001-2022. This results found that: The foreign direct investment inflow has 12,298.57 million US dollars on an average per year is equal to 559.03 million US dollars and has an average growth rate of 4.73% per year, for the public expenditure used to investment is increasing every year with an average growth rate of 10.96% per year. The exchange rate of kip per US dollar has an increasing trend but overall there is a growth rate equal to 1 digit only in 2022 there is a growth rate equal to 2 digits which is equal to 45.94%. For the inflation, the growth rate is 6.33% per year, which is the year with the lowest inflation rate is 2017 which is equal to 0.83% and the year with the highest inflation rate is 2022 which is equal to 22.96%, The decreasing trend in which the year with the highest interest rate on US currency loans is 2002 which is equal to 13.5% and the year with the lowest interest rate on US currency loans is 2011 which is equal to 8.15%, the open trade has an increasing trend. The year with the highest increase in 2021 is equal to 77.91% of GDP and the money supply is increasing every year. For the analysis of macroeconomic factors to foreign direct investment, it was found that the economic growth rate of gross domestic product (GDPGRO), public investment expenditure, the exchange rate of kip per US dollar and the money supply have a positive coefficient and reject the null hypothesis with a statistical significance level of 0.01 and 0.05 indicates that it is a doubtful factor for foreign direct investment to increase. Meanwhile, the inflation rate has a negative coefficient and rejects the null hypothesis at a statistical significance level of 0.05, which is a factor that reduces foreign direct investment transfers. For the interest rate in dollars and the open trade, there are accepted null hypothesis, it shows that there is no effect on the transfer of foreign direct investment.

IMPORTANCE OF PUBLIC FUNDS AND DEBT CAPITAL IN FINANCING INVESTMENTS IN POLISH AGRICULTURE IN 2004-2022

The article assesses the importance of public funds and debt capital in financing investment outlays in agriculture in Poland in 2004-2022. The analysis used statistical data on inputs of production factors in agriculture, in particular investment outlays, as well as budget expenditure on agriculture, farmers’ credit indebtedness and leasing of agricultural machinery. The analysis included both nominal values and values adjusted for the CPI index. It has been shown that capital expenditure in agriculture increased in the years 2004-2022, including nominal and real investment expenditure. During the period under study, the importance of public funds, from the national budget and European funds, in financing agriculture increased. This also applied to investments in agricultural farms. In 2004-2019, a dynamic increase in investment outlays financed in the form of bank loans and leasing could also be observed. A positive correlation was demonstrated between investment expenditure in agriculture and the level of budget expenditure on agriculture and farmers’ credit indebtedness. In the last years of the period under review, i.e. 2020-2022, a decrease in the share of external capitals in the form of long-term bank loans and leasing in financing fixed assets in agriculture was observed.

تأثير الإنفاق الحكومي في الــنموّ الاقتصادي في سلطـنة عمان

Understanding the relationship between government spending and economic growth is crucial because it is complex. While well-directed investments create a more favorable environment for businesses to thrive and thus stimulate economic growth, excessive spending may lead to inflation and crowd out the private sector, accordingly, hindering growth. This study seeks to determine the effect of public expenditures (investment expenditures, current expenditures, contributions, and other expenditures) on the Sultanate of Oman's economic growth, using quarterly data from 2010 to 2022. The study relies on the descriptive approach and the analytical quantitative approach by forming and estimating a standard model and then testing it using the bounds test of the Autoregressive Regression of Distributed Lags (ARDL) methodology to determine the long-term and short-term effects of public expenditures on economic growth through EViews 13. The results of the analysis show that there is a long-term and short-term effect of government investment expenditures on economic growth in Oman during the study period. The results also indicate that there is no significant effect of current government expenditures, contributions, and other government expenditures, neither in the short term nor in the long term. The study recommends a set of recommendations for decision-makers in Oman, the most important of which is to focus on investment expenditures, especially infrastructure projects that improve productivity, innovation, productive capacity, and long-term competitiveness.

Balancing act: Examining the trade‐offs between regional convergence and economic growth in China's province managing county reform

AbstractThe study examines the relationship between regional convergence, economic growth and government hierarchies, with a specific focus on the province managing county (PMC) reform policy in China. The motivation for this research stems from the observation that a substantial portion of the increased inequality in China is attributable to disparities at the county level. This underscores the necessity for policies that address regional inequalities at the county level while simultaneously promoting sustained economic growth. We employ a time‐varying quasi‐natural experiment to explore how this reform has influenced regional convergence and economic growth within the sample period. The outcomes reveal that the PMC reform had a detrimental impact on regional convergence, hindering it by an average of 2.6%, while economic growth received a modest increase of 0.36%. The study also reveals notable heterogeneity in the effects of the reform, contracted disparities in western region, alongside exhibiting widened disparities and higher growth in eastern & central region. The study also investigates the underlying mechanisms, finding that expenditures on basic provisions reduced, while county revenue and investment expenditures increased following the policy change. It proposes that the increased investment in capital expenditures stimulated economic growth but came at the cost of hindering regional convergence.

Regarding the finance-investment nexus in sub-Saharan Africa: an issue of too little or too much finance?

PurposeThis study investigates the finance-investment nexus in sub-Saharan Africa using data from 41 countries spanning the period from 2000 to 2022. The central question addressed is whether there is a “too little” or “too much” finance problem in the region.Design/methodology/approachThis study employs a system-generalised method of moments (GMM) approach to analyse the association between finance and private investment. Additionally, a dynamic threshold regression model is used to uncover potential nonlinearities in this relationship.FindingsInitially, the study identifies a negative correlation between increased finance and private investment. However, further analysis using the dynamic threshold regression model reveals a critical threshold level of finance. Specifically, the threshold is found to be 6.52% of domestic credit to the private sector and 23.18% using the financial development index. Below this threshold, finance negatively impacts private investment, while surpassing this threshold leads to positive growth in private investment. These findings indicate an issue of “too little” finance in the finance and private investment nexus in sub-Saharan Africa. The results are robust across different model specifications.Research limitations/implicationsThe implications of this study highlight the importance of identifying critical thresholds for financing to enhance investment expenditures in the region.Originality/valueThis study contributes to the literature by uncovering nonlinearities in the finance-investment nexus in sub-Saharan Africa. The identification of critical thresholds provides valuable insights for policymakers, emphasising the need to strengthen the financial sector in countries operating below these thresholds to promote private investment and economic growth.

Poverty, Inequality, and Social Protection in Ethiopia: A Policy Brief

In this brief commentary the author argues that social protection is not a useful approach to addressing poverty and inequality in low-income countries like Ethiopia. Instead, the author suggests focusing on wealth creation and the capability development approach to poverty reduction. To achieve this, the author proposes targeted state investment expenditure to enhance the productive capabilities of the economically vulnerable population. Besides, the social protection system should prioritize the design and implementation of livelihood improving investment programs, as in-kind or cash transfer support is not sustainable given the elevated level of economic vulnerability. The effectiveness of Ethiopia’s social protection system lies on improving coverage, targeting deserving individuals, and sustainable financing solutions.

Estimation of the Impact of Government Spending on Industrial Sector Development: A Case Study of Iraq for the Period (1990-2020)

The research mainly attempted to find out the impact of the public expenditure on the development of the Iraqi industrial sectors according to the period (1990 to 2020), as well as several other control variables. The analysis of available data suggested that the indicators of industry sector and fiscal policy tools in Iraq underwent great changes not only because of economic and political instability experienced by the country throughout the study period but also the new-emerged situations that followed, like the cases of wars, economic sanctions, and changes in governance systems that contributed significantly in creating a halt in fiscal policy. Empirically, the study ascertained several outcomes from the analysis. In this case, the empirical test of the hypothesis showed that there was a negative correlation between current expenses and manufacturing output, significant at a level of confidence (10%). On the opposite side, the standard correlation between capital outlay and industrial output is of a positive sign (0,05). Moreover, a current expenditure with an industrial output would make a negative relationship and would become significant at the level of significance of 10%, whereas investment expenditure and industrial output making a positive relationship with a level of significance of 5%. As part of study, it recommended the re-organization of public expenditure structure, enhancing discipline of budget formulation. This, in turn, will support the development of budgetary programs for the economy, particularly, the industrial sector.

IS ECONOMIC PERFORMANCE CONTRIBUTING TO ENVIRONMENTAL QUALITY? A CROSS-SECTIONAL ANALYSIS USING A GLOBAL DATASET

The European Green Deal strategy aims to decarbonize the EU economy and achieve ambitious sustainability goals. By evaluating and promoting environmentally sound development practices, the EU strives to lead by example and inspire global efforts towards a sustainable future. Moreover, The EU and OECD countries, alongside international frameworks, are committed to supporting vulnerable nations and advancing sustainable development worldwide. Through collaborative efforts and innovative policies, the EU and OECD aim to mitigate the impacts of climate change and pave the way for a more resilient and sustainable world. Analyzing the ecological sustainability of development patterns within the EU is integral to enhancing the EU's initiatives under the European Green Deal. In the opinion of the present study, the feasibility of European Green Deal needs further assessment from the perspective of a cost – benefits analysis, as the methodology employed in computing the costs involved raises several questions. This study underlines the multiple dimensions of environmental quality and proposes a methodology for building an aggregated index of environmental degradation. Subsequent analysis uses structural equations framework to investigate the impact of economic performance on environmental degradation index. Results are in line with previous findings in the field. Thus, present research has documented a positive and statistically significant impact of economic performances at macroeconomic level on the environmental degradation index. However, we also have shown that, while economic activity can contribute to environmental degradation, it can also drive positive environmental outcomes through technological innovation, investment in environmental protection, improved policies, sustainable consumption and production, creation of green jobs, and increased education and awareness. Thus, we have shown that, from a policy perspective, it is important to harness economic growth in ways that promote sustainability and environmental quality.

The impact of China's carbon emissions trading policy on corporate investment expenditures: Evidence from carbon-intensive industries

The carbon emissions trading (CET) policy internalises the cost of carbon emission reductions borne by companies, which will affect the companies' investment and management decisions. From a micro perspective, this paper analyzes the impact on company investment expenditure and its transmission mechanism by implementing the CET policy. Based on panel data of China's A-share listed companies from eight carbon-intensive industries spanning 2010 to 2020, the time-varying difference-in-difference model and its extended model are used to evaluate the impact of the policy in the pilot areas. The results show that: first, based on the cost effect and legality theories, CET policy can reduce the investment expenditure of the companies by 71.95%. Second, CET policy reduces corporate investment expenditures by increasing corporate debt financing costs. When debt financing costs increase by 120.25%, the investment expenditures will reduce by 2.56% indirectly while the intermediary effect of equity financing costs is not significant. Finally, with the implementation of CET policy, the inhibitory effect on corporate investment expenditures has gradually increased. CET policy has a more significant inhibitory effect on investment expenditures of nonstate-owned companies and small-scale companies. The results have passed the robustness test and provide evidence for the policy-maker to balance microeconomic entity development and carbon reduction, and for companies to make optimization investment and financing decisions in response to policy shocks effectively.

Shirking with good reputation? Evidence from hotel industry

This paper investigates the relationship between reputation and investment in quality within the hotel industry. Utilizing a panel dataset of hotel investment expenditures and online consumer ratings, I employ a regression discontinuity design, which leverages TripAdvisor's rating display system to identify the causal relationship between online ratings and hotels' investment decisions. The empirical findings indicate that higher ratings negatively impact investment expenditures, whereas lower ratings tend to stimulate investment. This observed shirking behavior among hotels with better ratings may be ascribed to diminishing marginal returns on investment and reduced competitive pressures.

Love and Organizing in the Context of the Base of the Pyramid: An Integrative Justice Perspective

This paper provides an overview of the Integrative Justice Model (IJM) for impoverished populations that was introduced in the marketing literature in the year 2009. The IJM was developed as a normative ethical framework to guide the growing corporate interest in the base of the pyramid (BoP) market to be fair and just to all parties but particularly the impoverished customer. In an impersonal marketplace that often exploits the less advantaged participant, the IJM provides five characteristics of “just” market situations. These are an authentic non-exploitative engagement, value co-creation, investment in future consumption, stakeholder interest representation and long-term profit management. At the heart of the IJM is love that flows from a recognition of the inherent dignity of those at the BoP and the need to respect and uphold that dignity in the marketplace. The hope is that as companies embrace the IJM in their functioning it will result in a marketplace that is fair, just, humanistic and loving.

Modelling the Relationship Between Public Expenditure, Tax Revenue and Economic Growth in Türkiye Using the AARDL Approach

This study aims to investigate the macroeconomic impact of fiscal policy in Türkiye, where fiscal policy faces several challenges. Using annual time series data from 1980 to 2021, we examine the impact of tax and public expenditure subcomponents on GDP using the augmented autoregressive distributed lag (A-ARDL) bound test approach proposed by Sam et al. (2019). The A-ARDL test results indicate that tax revenue has a positive impact on economic growth in the short run, while tax revenue has a negative impact on economic growth in the long run. Furthermore, we conclude that increases in current and investment expenditures have a positive impact on economic growth in the short and long run, while increases in transfer expenditures have a negative impact on economic growth in the short run.

Impact of the total expenditure shocks on food security: VAR model

Purpose. This study examines the causal relationship between total expenditures and food availability and identifies their shocks in food availability in Saudi Arabia. Methodology / approach. The study uses a multivariate modeling technique of the Vector Autoregression (VAR) and its environment, the Granger Causality Test, Forecast Error Variance Decomposition (FEVD), and Impulse Response Function (IRF) for the observation period of 2000–2020 in Saudi Arabia. Results. The results of the Granger causality show that investment expenditure has a significant impact on food availability in Saudi Arabia. However, consumption and government expenditures do affect food availability in Saudi Arabia, but have an indirect effect. The Impulse Response Functions show that the shocks of the selected variables require a long period to reach the long-run equilibrium level and the greatest response of the food availability variable is explained by its own shock and investment expenditure shocks. Originality / scientific novelty. The novelty of this study is related to the investigation of a new model and focus on a new perspective. While traditional food security research has mostly concentrated on agricultural production, availability, and accessibility of food, as well as nutrition and health outcomes factors, this research conveys a new dimension by highlighting the link between total expenditure and food security. Their contribution expands the scope of food security research and highlights the impact of recognising the role of total expenditure in implementing and supporting food security at the household level. Practical value / implications. It is important to design strategies and develop a budgeting plan to allocate a reasonable portion of total consumption and government expenditures on food items. Adding, regularly reviewing, and adapting the budgeting plan based on new challenges, and evolving priorities are essential to address the dynamic nature of food security.

Solving constrained consumption–investment problems by decomposition algorithms

Consumption–investment problems with maximizing utility agents are usually considered from a theoretical viewpoint, aiming at closed-form solutions for the optimal policy. However, such an approach requires that the model be relatively simple: even the inclusion of nonnegativity constraints can prevent the derivation of explicit solutions. In such cases, it is necessary to solve the problem numerically, but standard dynamic programming algorithms can only solve small problems due to the curse of dimensionality. In this paper, we adapt the Stochastic Dual Dynamic Programming (SDDP) algorithm to solve dynamic constrained consumption–investment problems with stochastic labor income numerically. Unlike classical dynamic programming approaches, SDDP allows us to analyze problems with multiple assets, and an internal sampling procedure allows the problems to have a very large, or even infinite, number of scenarios. We start with a simpler problem for which a closed-form solution is known and compare it to the optimal policy obtained by SDDP. We then illustrate the flexibility of our approach by solving a defined contribution pension fund problem with multiple assets, for which no closed-form solution is available.

Duality in optimal consumption–investment problems with alternative data

This study investigates an optimal consumption–investment problem in which the unobserved stock trend is modulated by a hidden Markov chain that represents different economic regimes. In the classic approach, the hidden state is estimated using historical asset prices, but recent technological advances now enable investors to consider alternative data in their decision-making. These data, such as social media commentary, expert opinions, COVID-19 pandemic data and GPS data, come from sources other than standard market data sources but are useful for predicting stock trends. We develop a novel duality theory for this problem and consider a jump-diffusion process for alternative data series. This theory helps investors identify “useful” alternative data for dynamic decision-making by providing conditions for the filter equation that enable the use of a control approach based on the dynamic programming principle. We apply our theory to provide a unique smooth solution for an agent with constant relative risk aversion once the distributions of the signals generated from alternative data satisfy a bounded likelihood ratio condition. In doing so, we obtain an explicit consumption–investment strategy that takes advantage of different types of alternative data that have not been addressed in the literature.

A Study on the Impact of the Scale and Structure of China's fiscal expenditure on people's Livelihood

As a public finance model with Chinese characteristics, people's livelihood finance is rooted in China's current national conditions and development stage. This concept marks a major shift in China's development strategy, from a single fo cus on economic construction in the past to a comprehensive development model that attaches equal importance to economic growth and people's well being. This change not only reflects the country's great attention to people's livelihood issues, but also indicates that China's economy and society are moving towards a new stage that pays more attention to people's livelihood. However, translating ideas into concrete policies and practices does not happen overnight, and requires time to settle and co ntinuous explorati on. Therefore, the key to the construction of people's livelihood finance is to reasonably determine and optimize the scale and structure of financial expenditure in the field of people's livelihood. This paper aims to deeply analyze the current sit uation of China's fiscal expenditure investment in the field of people's livelihood, explore its development trend through empirical an alysis, and reveal the existing problems. Specifically, this paper first makes a quantitative analysis of the scale of China's f iscal livelihood expenditure to reveal its changing trend over time. Then, we will further explore the changes in the expenditure structure, i ncluding the proportion and distribution of investment in key livelihood areas such as education, health care and social security. On this basis, this paper will reveal the existing problems of the current financial expenditure on people's livelihood. In order to deeply analyze the reasons behind these problems, this paper will further explore the main factors that le ad to the scale and structure of fiscal expenditure on people's livelihood. These factors may include unclear policy guidance, imperfect fisc al system, and imperfect supervision mechanism. Through the in depth analysis of these reasons, this paper aims to provide targeted optimization suggestions for the construction of livelihood finance.

Fiscal Prudence and Economic Growth in Asia: the role of Efficient Public Spending

The present research is an attempt to study the role of public sector efficiencies in determining optimal fiscal size of the governments for selected Asian countries. Studying efficiency of public spending is important because efficient government spending leads to improved provision of public services like health, education, infrastructure, and welfare initiatives. Improving public sector efficiency will help to promote transparency and accountability which reduces the chances of corruption and wastage of scarce public resources. Using the panel data for 19 developing countries for years 1996-2022, efficiency augmented optimal size of government expenditures is calculated. Pooled Mean Group technique is employed to calculate the impact of efficiency on growth maximizing levels of government total spending, government consumption spending and government investment spending. Results establish strong impact of efficiency in public expenditures on optimal fiscal size. Other variables enhancing economic growth include capital stock and trade openness, while human capital has negative effects. Public sector efficiencies are found to reduce growth maximizing size of government spending. The optimal size of government total expenditure is estimated to be 25.19 %, while optimal fiscal size for government consumption expenditure and government investment expenditure are 14.04%, and 11.18 % respectively for developing Asian countries.

Local corruption and SME investment

Prior research shows that corruption negatively affects corporate investment in large firms. However, we posit that this effect may be opposite in the context of SMEs. This paper investigates the relationship between local corruption and SME investment in a transition economy. With a sample of 262,767 observations, we document that local corruption is positively related to both SME investment expenditure and investment efficiency.

The effects of fiscal policy management, candidacy of previous mayors, and illiteracy on mayoral reelection in Brazil

AbstractThis study investigates factors influencing the reelection prospects of Brazilian mayors. Analyzing a comprehensive data set spanning 5114 municipalities across four elections reveals that increases in investment and current expenditures before elections pay off at the polls. Moreover, higher average investment expenditures throughout the term enhance reelection chances. The results also indicate that when former term‐limited mayors run against the incumbent, reelection probability diminishes, particularly with higher average investment by the previous mayor. Finally, the level of literacy shapes voter attitudes towards opportunistic fiscal strategies: voters with limited literacy are inclined to reward increases in current expenditures, whereas more educated populations prefer increasing investment.