Issue Of Reverse Causality Research Articles

US Security Strategy and the Gains from Bilateral Trade

AbstractWe explore the geo‐strategic determinants of bilateral trade flows between the USA and the rest of the world. We develop a three‐party model of security and trade patterns and use data on military assistance and troop deployments over the 1950–2009 period to validate its predictions. We find that security assistance has significant, positive impacts on the shares of bilateral trade between the USA and the recipient country, results that are robust to issues of reverse causality and hold across different sectors.

Love Thy Neighbor: Religion and Prosocial Behavior

There is a long tradition in psychology, the social sciences and, more recently though, economics to hypothesize that religion enhances prosocial behavior. Evidence from both survey and experimental data however yield mixed results and there is barely any evidence for Germany. This study adds to this literature by exploring data from the German Socio-Economic Panel (SOEP), which provides both attitudinal (importance of helping others, of being socially active) and behavioral components of prosociality (volunteering, charitable giving and blood donations). Results from analyses that avoid issues of reverse causality suggest mainly for moderate, positive effects of individuals' religious involvement as measured by church affiliation and church attendance. Despite the historic divide in religion, results in West and East Germany do not differ substantially.

The Effect of Market Power on Bank Credit Risk-Taking and Bank Stability in Kazakhstan

The purpose of this research is to analyze the effect of banking market power on both the credit risk-taking attitude of Kazakhstani banks and the overall stability of the banking system. This analysis is particularly important for the Kazakhstani financial system as it has been going through the process of consolidation and intensive regulation which has led to a significant decrease in the number of banks. Greater banking market concentration leads to an increase in the market power of some banks and, as a result, potentially limits competition. The sample contains quarterly data for 19 domestic Kazakhstani banks for the period 2007–2011. We employ an instrumental variable technique with a generalized method of moments estimator to overcome the heteroskedasticity and reverse causality issues. Lerner Index is used as a measure of banking market power, credit risk-taking is estimated by the ratio of overdue loans to total bank loans and overall bank stability is measured by the Z-score index. The results indicate that increased market power is negatively associated with credit risk-taking by Kazakhstani banks. At the same time, this increased market power has a significant positive impact on bank stability. These results empirically support the current policy of the Central Bank of Kazakhstan on promoting greater consolidation of small and medium size banks.

Social Capital and Improved Stoves Usage Decisions in the Northern Peruvian Andes

Summary This paper explores how village level technology usage patterns and bonding social capital (the strength of intra-communal links) mutually influence the individual usage decision of an improved stove in the Peruvian Andes. It shows that the individual usage likelihood is more responsive to village usage patterns if communal bonding links are relatively strong, and that bonding social capital discourages individual usage if the proportion of beneficiaries experiencing usage problems is relatively high. Usage problems were mainly related to faulty stove’s materials, which were likely exogenous to households’ characteristics. Social capital was measured before the intervention, which alleviates reverse causality issues.

Broadband penetration and economic growth in ASEAN countries: a generalized method of moments approach

Broadband infrastructure has numerous economic potentials. This study examines the impact of broadband penetration on economic growth in the panel of 10 countries of the Association of Southeast Asian Nations (ASEAN) from 1998 to 2011. Based on the pooled Ordinary Least Squares (OLS), fixed effects and random effects estimates, we found that broadband deployment has a positive relationship with economic growth. In addition, we used the Generalized Method of Moments (GMM) dynamic panel data model to address the reverse causality and potential endogeneity issues in this study. The result also reveals that broadband penetration appears to be a key factor in the explanation of Gross Domestic Product growth. The finding remains robust even after the control for Information and Communication Technology (ICT) goods imports. This result in turn suggests that the utilization of broadband infrastructure and application is expected to enhance the national aggregate outputs.

Risk factors for the development of egg allergy: progress to date and future directions

Risk factors for the development of egg allergy: progress to date and future directions

Low-cost carriers and airports’ performance: empirical evidence from a panel of UK airports

During the last decade, the proliferation of Low Cost Carriers and the related huge increase in tra¢ c has been the most visible eect of the deregulation of the airline market in Europe. Little attention has been paid to how airports were aected by the changes in the new institutional environment. In this study we model the total factor productivity (TFP) for a panel of the UK largest airports over the 2002-2005 period and investigate whether the presence of LCCs had some impact on airports'TFP. Empirical results are consistent with the hypothesis that conspicuous entry of LCCs on European markets has impacted positively on the vertical chain by facilitating airports'productivity improvements. This result is robust to reverse causality issues associated with the possibility that most e¢ cient airports are those that are more likely to attract LCCs. Dierent possible argu- ments may explain our results: tra¢ c increases brought about by LCCs for a given installed capacity might have generated higher TFP; more e¢ cient organizational models might have been adopted to meet LCCs operational requirements (short turnaround times); cost reductions might have been realized in order to lower charges and attract LCCs; competition from a larger number of airports induced by LCCs'wider catchment areas (with respect to full service airlines) might have exerted further pressure toward TFP improvements.

Are multinationals exporting jobs? The case of Taiwan

Does offshore production always result in jobexpor tation? Using firmlevel data for Taiwanese multinationals that allow us to avoid reverse causality issues, this research finds that while increasing offshore production has a negative impact on the demand for domestic manufacturing workers, this is not the case for domestic R&D workers, who are often moreskilled. The empirical study also suggests that for Taiwan, there is a geographical fragmentation of distinct production activities in a way that more skilled jobs are kept domestically, and less skilled jobs are exporting to other developing countries. These findings confirm the prediction of the knowledge capital model presented by Markusen et al. (1996) and Markusen (1997).

The relationship between online chatter and firm value

The visible trace of online communications has given rise to research on their effect on firm outcomes. The literature has established a link between online communication about a product and the product’s sales and price performance. On the assumption that financial markets understand this link, we conjecture financial markets consider the amount of online communication, or chatter, about a firm to be an indication of the firm’s performance in the marketplace. Our results confirm this conjecture. The relationship between stock returns and chatter are robust to alternative specifications of the model and to alternative measures of stock returns. We also investigate the issues of reverse causality and omitted variable bias driving a spurious relationship between stock returns and chatter. The data are not consistent with any of these alternative explanations for our results.

Economic and social factors driving the third wave of democratization

We identify permanent democratic transitions during the Third Wave of Democratization and the nineties, when many former socialist countries moved towards representative rule. Using political freedom indicators, electoral archives, and historical resources in 174 countries in the period 1960–2005, we identify 63 democratic transitions, 3 reverse transitions from relatively stable democracy to autocracy and 6 episodes of small improvements in representative institutions. We also classify non-reforming countries to stable autocracies and always democratic. We then use the data set to test theories on the prerequisites for democracy in these countries that enter the Third Wave as non-democracies. Examining initially autocratic countries enables us to address issues of sample selection (in the beginning of the sample most developed countries were already democratic) and reverse causality (democracy can be both a cause and a consequence of wealth, for example). Our estimates reveal that democratization is more likely to emerge in affluent and especially educated societies. Economic development and education are also key factors determining the intensity of democratic reforms and how quickly democratic transitions will occur. These results appear robust to controls like the social environment (religion and fractionalization), natural resources, trade openness and proxies of early institutions. Journal of Comparative Economics 36 (3) (2008) 365–387.

State Visits and International Trade

Politicians travel extensively abroad, for various reasons. One purpose of external visits is to improve bilateral economic relations. In this paper, I examine the effect of state visits on international trade. Based on a large data set that covers the travel activities of the heads of state of France, Germany and the United States for the period from 1948 to 2003, I find that state and official visits are indeed positively correlated with exports. I first apply a gravity model of trade to control for other trade determinants and find that a visit is typically associated with higher exports by about 8 to 10 per cent; the results are sensitive to the type of visit (as they should). I then use a differences‐in‐differences specification to deal with the issue of reverse causality. The results show a strong, but short‐lived effect of visits on bilateral exports growth, which is driven by repeated visits to a country. Additional support is provided by an exploratory instrumental vari‐ables analysis.

05/01373 Structural break, unit root, and the causality between energy consumption and GDP in Turkey

We identify permanent democratic transitions during the Third Wave of Democratization and the nineties, when many former socialist countries moved towards representative rule. Using political freedom indicators, electoral archives, and historical resources in 174 countries in the period 1960–2005, we identify 63 democratic transitions, 3 reverse transitions from relatively stable democracy to autocracy and 6 episodes of small improvements in representative institutions. We also classify non-reforming countries to stable autocracies and always democratic. We then use the data set to test theories on the prerequisites for democracy in these countries that enter the Third Wave as non-democracies. Examining initially autocratic countries enables us to address issues of sample selection (in the beginning of the sample most developed countries were already democratic) and reverse causality (democracy can be both a cause and a consequence of wealth, for example). Our estimates reveal that democratization is more likely to emerge in affluent and especially educated societies. Economic development and education are also key factors determining the intensity of democratic reforms and how quickly democratic transitions will occur. These results appear robust to controls like the social environment (religion and fractionalization), natural resources, trade openness and proxies of early institutions. Journal of Comparative Economics 36 (3) (2008) 365–387.

Economic and Social Factors Driving the Third Wave of Democratization

We identify permanent democratic transitions during the Third Wave of Democratization and the nineties, when many former socialist countries moved towards representative rule. Using political freedom indicators, electoral archives, and historical resources in 174 countries in the period 1960-2005, we identify 63 democratic transitions, 3 reverse transitions from relatively stable democracy to autocracy and 6 episodes of small improvements in representative institutions. We also classify non-reforming countries to stable autocracies and always democratic. We then use the dataset to test theories on the prerequisites for democracy in these countries that enter the Third Wave as non-democracies. Examining initially autocratic countries enables us to address issues of sample selection (in the beginning of the sample most developed countries were already democratic) and reverse causality (democracy can be both a cause and a consequence of wealth, for example). Our estimates reveal that democratization is more likely to emerge in affluent and especially educated societies. Economic development and education are also key factors determining the intensity of democratic reforms and how quickly democratic transitions will occur. These results appear robust to controls like the social environment (religion and fractionalization), natural resources, trade openness and proxies of early institutions.

Analgesic-associated nephropathy in the West of Scotland: a 12-year observational study

Analgesic-associated nephropathy (AAN) is an important and preventable cause of chronic renal failure (CRF). Although its incidence is falling in some countries, others are witnessing an increase in the number of new cases. The aim of this study was to evaluate the natural history of AAN, determine the correlates of the rate of decline in renal function and examine factors conferring an increased risk of death or dialysis in such patients. A prospective observational cohort study of all patients with AAN attending a single-centre was conducted. Seventy-eight patients (25 male), with at least 24 months of follow-up for analysis, were diagnosed as having AAN over the 10-year period 1989-1999. During follow up, the mean (+/-SD) rate of change in estimated creatinine clearance (ECC) was -1.2 ml/min/year (+/-5.28). By multiple linear regression three variables were found to independently predict the rate of deterioration in ECC; continuing analgesic use (P < 0.001), degree of proteinuria at presentation (P = 0.002) and male sex (P = 0.03). A Cox's model revealed a 6-fold increase in the hazard of reaching the combined end-point of death or dialysis in those patients with AAN who continue to use analgesics. This was independent of the other two significant risk factors of pre-existing vascular disease (HR 3.93, 1.36-11.29) and ECC at presentation (HR 0.95, 0.91-0.98 per ml/min). In patients with CRF due to AAN ongoing analgesic use, male gender and increasing proteinuria predict a more rapid decline in renal function. Patients who continue analgesics, those with pre-existing vascular disease and those with more advanced renal impairment at presentation, are at a significantly increased risk of reaching the combined end-point of death or end-stage renal failure requiring dialysis. The design of this study, however, leaves it open to the criticism that selection bias may account for some of its effects, and as with all work on AAN the possible confounding issue of reverse causality is difficult to dismiss.

Modeling the effects of health on economic growth

This paper investigates the effects of health indicators such as adult survival rates (ASR) on GDP growth rates at 5-year intervals in several countries. Panel data were analyzed on GDP series based on purchasing power adjustments and on exchange rates. First, we developed a framework for modeling the inter-relationships between GDP growth rates and explanatory variables by re-examining the life expectancy–income relationship. Second, models for growth rates were estimated taking into account the interaction between ASR and lagged GDP level; issues of endogeneity and reverse causality were addressed. Lastly, we computed confidence intervals for the effect of ASR on growth rate and applied a test for parameter stability. The results showed positive effects of ASR on GDP growth rates in low-income countries.

Estimates of the demand for health: males in the pre-retirement years.

The demand for health is estimated for black and white males in the pre-retirement years using data from the first wave of 1966 National Longitudinal Survey of men aged 45-59. This survey includes direct measures of the wage rate and family assets. Findings for whites generally corroborate Grossman's initial estimates of the demand for health. In contrast to whites, blacks show a much stronger wage effect and a significant positive effect of wife's education, with no other factors being significant. The issue of reverse causality between the wage and health is addressed via a simultaneous equations health-wage model. Contrary to expected, but consistent with previous findings, the structural model yielded an even larger wage effect.