Economic Literature Research Articles

A citizen-candidate model of party formation

AbstractThere are multiple models of party formation in the political economy literature. However, most of these works consider individuals as parties and do not model parties as a group of candidates. In this paper, we follow the latter approach and assume that parties form as a result of mutually agreeable links between candidates. We consider a citizen-candidate model of electoral competition where candidates decide whether they want to participate in election alone or offer links to adjacently placed candidates on a one-dimensional policy space. We characterize one-party and two-party equilibrium and show that no multi-party equilibrium exists with three or more parties. We provide conditions on the rents of winning with respect to the cost of participating in election which also depend on the number of candidates. We provide new insights which explain party formation from the perspective of group formation. Our results confirm the Duverger’s law and are consistent with empirical evidence on plurality voting systems.

What Is This “Tranquility”? A Reply to Nelson

Abstract In a note appearing in the August 2024 issue of History of Political Economy (HOPE), Edward Nelson argues that a passage commenting on James Forder's Macroeconomics and the Phillips Curve Myth (2014) in a 2023 HOPE article by Carlo Cristiano titled “The Early Reception of the Phillips Curve in the United Kingdom” would provide a false characterization of the economic literature and claims priority in affirming that UK policymakers did not use the Phillips curve as a menu for policy. It is shown in this reply that Nelson's reading of Cristiano's 2023 article, and more specifically of the passage commenting on Forder's 2014 book, is based on a misunderstanding. The purpose of the 2023 article was not to show that UK policymakers did not use the Phillips trade-off as a menu for policy. In that article, consensus on this point is taken for granted. It is also argued in this reply that there is no need to mention Nelson's works to affirm that UK policymakers did not use the Phillips trade-off as a policy menu and that Nelson's works are indeed very relevant, but for other reasons.

Empirical analysis of the twin deficits hypothesis in the republic of North Macedonia

The twin deficits hypothesis is widely considered one of the most frequently employed phenomena in the economic literature. An econometric analysis of the twin deficit hypothesis is of special importance in understanding the perspective on macroeconomic stability in the Republic of North Macedonia. This paper aims to empirically test the validity of this hypothesis in the Republic of North Macedonia. To do so, we utilized quarterly data on Macedonia’s budget deficit, the current account deficit, exchange rate, interest rate, GDP, government expenditure, and money supply, starting from the first quarter of 2001 to the fourth quarter of 2022. Through the application of the ARDL model, the study found that between the variables taken into analysis, there exists a short and long-run relationship. More specifically exchange rate, government expenditure, and GDP result in improvement on the budget deficit, both in the short run and long run. While current account deficit, interest rate, and money supply result in worsening the budget deficit, both in the short run and long run.

Green Economics in Global Perspective based on Bibliometric Review

This study presents a comprehensive bibliometric analysis of green economics literature from 1967 to 2024, highlighting thematic clusters, research trends, potential research topics, and author collaborations. The analysis identifies key themes such as green innovation, energy, economic activities, green investment, and policy frameworks, emphasizing the multifaceted nature of the field. Temporal trends reveal a progression from foundational economic activities to a focus on green innovation and integrated policy initiatives. Potential research areas include financial instruments like green bonds, regulatory frameworks, and the economic benefits of sustainable practices. The author collaboration network shows significant cooperative efforts, with tightly-knit clusters of researchers driving advancements in green economics. This interdisciplinary and collaborative nature suggests that future research will benefit from continued partnerships and integrated approaches to sustainability.

The Effect of Agricultural Subsidies on Rice Productivity and Prices in Southeast Asia: A Panel Regression Study

Agricultural subsidies have become a common instrument used by countries in the Southeast Asian Region to support farmers, increase food production, and control prices. However, the effectiveness and long-term impact of these subsidies are still a hot debate in the economic literature. The purpose of this study is to analyze how agricultural subsidies affect rice productivity and rice prices in three Southeast Asian countries: Indonesia, Thailand, and Vietnam, during the period 2020-2023. The method used in this study is panel data analysis with a fixed effect to control the variation between countries that is not observed. Panel regression analysis was carried out to identify the relationship between agricultural subsidies and the two dependent variables. The F-test and Chi-square test are used to test for the existence of fixed effects, while the cross-section dependency test is used to check the residual correlation between countries. The results of this study show that the regression results of the panel show that agricultural subsidies have a significant negative impact on rice productivity (Y1), which may reflect inefficient resource allocation or the presence of market distortions that hinder productivity increase. In contrast, subsidies have a significant positive impact on rice prices (Y2), suggesting that subsidies can help maintain price stability and provide economic benefits for farmers. From the overall analysis, agricultural subsidies in Southeast Asia have a complex and diverse impact on rice productivity and prices. While subsidies help maintain price stability and support farmers' welfare, their impact on rice productivity still needs to be further eval_uated to ensure more efficient and sustainable allocations. Governments in the region need to continue to review and adjust their subsidy policies in order to strike a balance between supporting smallholders, increasing productivity, and maintaining rice price stability, while minimizing negative impacts on markets and the environment.

How does implementing the Extractive Industries Transparency Initiative (EITI) affect economic growth? Evidence from developing countries

Although there is no consensus on the relationship between natural resource abundance and economic growth, much of the economic literature suggests that natural resource abundance negatively affects economic growth in developing countries, leading to the resource curse theory. This situation led the international community to create the Extractive Industries Transparency Initiative (EITI) in 2003 to promote the effective contribution of natural resources to economic growth through a process involving governments, extractive industries, and civil society. Considering 99 developing countries from 1995 to 2019 and applying recent heterogeneity-robust difference-in-differences (DID) estimators, we find a positive and statistically significant relationship between EITI implementation and economic growth. Several robustness checks support this result. Most interestingly, the analysis of EITI’s dynamic effects reveals that these effects occur only in the short and medium terms. In addition, we tested several potential transmission channels and identified the increase in foreign direct investment and the rise in resource revenue as the main transmission channels. Moreover, we postulate and investigate four possible explanations behind the EITI’s mixed results on long-term growth: the lack of evidence of a negative relationship between natural resource abundance and long-term economic growth over the study period, a possible increasing reliance on non-resource taxes, a possible signaling effect targeted by member countries, and the lack of effect of EITI implementation on reducing corruption. Finally, the document provides economic policy recommendations for better governance in the management of natural resources in order to increase their contribution to development financing. Furthermore, improving governance in managing critical minerals is vital to avoid a “new curse of critical minerals”.

Improving children’s learning in developing countries: what works and what doesn’t

Policymakers in low- and middle-income countries have been successful in getting children to school. However, spending more time in school has not led to the development of age-appropriate math and language skills. In contrast to earlier full-length systematic reviews, we will briefly summarize key findings and challenges from the education literature in development economics targeting this article towards non-specialists. Two findings emerge from our review: one, given the complementarities in educational inputs, we need policy interventions that target multiple inputs in a child production function to have the greatest impact on learning outcomes. Two, interventions that target teacher effort and student effort together appear to have the greatest promise in being able to facilitate learning among children.

The impact of social globalization on domestic savings: a long-run macroeconomic analysis of advanced ageing economies in the Asia-Pacific Region

ABSTRACT The economics literature has extensively investigated the influence of demography and macroeconomic variables on domestic savings. However, another crucial aspect that needs to be considered in the literature is social globalization concerning conspicuous consumption, which may disproportionately impact savings behaviour in different countries. This paper aims to ascertain how social globalization affects domestic savings at the macroeconomic level in the long run, specifically focusing on countries that have reached advanced stages of ageing in the Asia-Pacific region. Cointegration analysis via the augmented autoregressive distributed lag (A-ARDL) bounds test is used in this paper. The main results show that social globalization and domestic savings are cointegrated in the long run for New Zealand, Japan, South Korea, and Hong Kong. Long-run relationship estimates yield that social globalization intensification leads to a decline in savings, supporting Veblen’s conspicuous consumption theory. Specifically, more Western-oriented countries experience a much more substantial impact of social globalization on savings. To address conspicuous consumption, policymakers should embrace a holistic strategy that encourages savings and financial prudence while discouraging excessive and status-oriented expenditure.

Investor heterogeneity and global stock market participation

To what extent does investor heterogeneity influence decision to invest in stock market? We address this question by drawing on the behavioural economics literature and analyse the impact of national culture on stock market data of forty seven countries spanning from 2000 to 2022. Our findings demonstrate that investors’ heterogeneity significantly accounts for the variation in stock market participation and the results remain consistent despite many robustness checks.

Does Globalization Reduce Youth Unemployment? Augmented ARDL Approach

While unemployment is a significant issue that has been extensively discussed in economic literature for decades, it is one of the key indicators that governments and firms consider. In fact, reducing unemployment in a country contributes to both increasing social welfare and economic welfare. Fluctuations in unemployment figures during the globalization process have led researchers to prioritize this issue. The objective of this study is to ascertain the impact of globalization on youth unemployment in Türkiye over the period 1988–2021, utilizing the augmented ARDL approach. The KOF Globalization Index, a frequently utilized indicator in the literature, is selected to represent globalization. However, the study is limited by the fact that the most recent data from the KOF index belongs to 2021, and the data on youth unemployment began in 1988. The limited number of studies on the relationship between globalization and youth unemployment in Türkiye constitutes the starting point of this study. The findings of the study indicate that an increase in globalization in the long run decreases youth unemployment in Türkiye. Furthermore, economic growth, inflation, and foreign direct investments also decrease youth unemployment, while an increase in urbanization increases youth unemployment. In addition, if a deviation occurs in the short run, approximately 85% of these deviations disappear in the first period and converge towards the long-run equilibrium.

Untraded inter‐dependencies as auxiliary production factors for informal artisans in urban industrial clusters: An empirical study in Kumasi, Ghana

AbstractThe concept and influence of untraded inter‐dependencies are under‐explored in the industrial cluster and informal economy literature. In this paper, we attempt to bridge this gap by extending the conventional Cobb‐Douglas production function to operationalising and testing the moderating effects of two forms of untraded inter‐dependencies in informal production. Based on the diffusion theory, we argue that knowledge‐sharing would favour informal production, as opposed to tool‐sharing. Using quantitative methods, 334 informal artisans were randomly sampled from three clusters in the Kumasi Metropolis of Ghana and analysed data obtained with moderating models and simple slopes plots. The tested models and fuzzy set configurations confirmed that knowledge‐sharing, but not tool‐sharing, has significant interaction effects on informal production. The optimal model derived would be one in which capital interacts with incremental knowledge‐sharing at the existing level of tool‐sharing among the artisans. This paper serves as an extension of new economic geography with an additional factor of untraded inter‐dependencies. As part of post‐COVID restoration and enhancement of informal production processes, we recommend city officials to deliberately plan and space clustered enterprises that enable the observed rates of interactions between production factors and untraded inter‐dependencies.

The probable impact of policies and policy measures on globalisation

This paper aims to identify the impact of the recent economic and non-economic shocks on the globalisation of trade in terms of trade policy and structural openness, and to take a side in the discussion about the reversal, the slowdown, and the continuation of trade globalisation. The report argues that geopolitical decisions based on pure political priorities and different macro- and micro-policies may harm trade globalisation temporarily. Nevertheless, in the long run, underlying economic factors, such as decreasing trade costs and expanding services trade remain the critical driving forces of globalisation. The speed of the process is likely to be slower than before, and its characteristics are different. With weakening multilateralism and increasing fragmentation, the emerging global world order will be suboptimal from the point of view of economic efficiency. Journal of Economic Literature (JEL) codes: F01, F02, F13, F60.

A TESCO Magyarország fenntarthatósági és közösségi tevékenysége menedzsment összefüggésének vizsgálata

In their fifth sustainability management case study, the authors examine the focus, organizational processes, and operation of TESCO's responsibility and community activities in Hungary. On the one hand they executed analyses of publicly available company reports and internal documents, while on the other hand, they conducted semi-structured interviews with internal and external experts who play a key role in the added CSR activities. In addition to the descriptive presentation of the activities, the authors' work points out that there are many crutial organizational conditions for the effective management of organizational processes related to sustainability and communities, furthermore they highligted the possibilities and limitations of involving external parties and service providers, as well. The value of the case study is enhanced by the fact that no comprehensive case study presenting the sustainability activities of the leading domestic food retail companies has been published recently. Journal of Economic Literature (JEL) codes: A13, D6, F6, M14, M19, M38

Factors of innovative development of socio-economic system

Aim. To identify and systematize the factors of innovative development of modern socio- economic system.Objectives. To characterize the contribution of innovation in modern socio-economic development, including the need to achieve technological sovereignty; to analyze the approaches to identifying the factors of innovative development of modern socio-economic system; to propose the author’s systematization of factors of innovative development.Methods. The article is based on the application of mainly monographic method of research; using this method the author has studied approaches to innovative development, which are reflected in the modern economic literature. General scientific and specialized methods of scientific research were also used: analysis and synthesis, grouping method, system analysis, etc.Results. Innovations are recognized as one of the key tools of socio-economic development. Their importance has especially increased in modern conditions, when Russia was under the influence of sanctions of the collective West, limiting its technological development, which actualized the problem of achieving technological sovereignty and reducing the risks of import dependence. The problem of stimulating innovation activity has arisen and actualized, which requires an understanding of the factors influencing it. The study shows that these factors are diverse, there is no single approach to their identification and classification. This requires a combination of the available results of factor analysis in order to identify not only the composition and mechanisms of influence on innovative development of selected factors, but also to determine their mutual influence, which can act both as a stimulant and inhibitor of innovative development of socio-economic system.Conclusions. The formation of innovation potential is one of the key factors of economic growth, a necessary condition for the quantitative and qualitative development of socio-economic system. The research on identification and systematization of factors of innovative development of modern socio-economic system is a necessary prerequisite for this kind of development. The direction of further author’s research is the development of a methodology for assessing innovation potential, taking into account the impact and mutual influence of the identified factors of innovative development.

Advances in Difference-in-differences Methods for Policy Evaluation Research.

Difference-in-differences (DiD) is a powerful, quasi-experimental research design widely used in longitudinal policy evaluations with health outcomes. However, DiD designs face several challenges to ensuring reliable causal inference, such as when policy settings are more complex. Recent economics literature has revealed that DiD estimators may exhibit bias when heterogeneous treatment effects, a common consequence of staggered policy implementation, are present. To deepen our understanding of these advancements in epidemiology, in this methodologic primer, we start by presenting an overview of DiD methods. We then summarize fundamental problems associated with DiD designs with heterogeneous treatment effects and provide guidance on recently proposed heterogeneity-robust DiD estimators, which are increasingly being implemented by epidemiologists. We also extend the discussion to violations of the parallel trends assumption, which has received less attention. Last, we present results from a simulation study that compares the performance of several DiD estimators under different scenarios to enhance understanding and application of these methods.

Recurrent double-conditional factor model

AbstractIn economic applications, the behavior of objects (e.g., individuals, firms, or households) is often modeled as a function of microeconomic and/or macroeconomic conditions. While macroeconomic conditions are common to all objects and change only over time, microeconomic conditions are object-specific and thus vary both among objects and through time. The simultaneous modeling of microeconomic and macroeconomic conditions has proven to be extremely difficult for these applications due to the mismatch of dimensions, potential interactions, and the high number of parameters to estimate. By marrying recurrent neural networks with conditional factor models, we propose a new white-box machine learning method, the recurrent double-conditional factor model (RDCFM), which allows for the modeling of the simultaneous and combined influence of micro- and macroeconomic conditions while being parsimoniously parameterized. Due to the low degree of parameterization, the RDCFM generalizes well and estimation remains feasible even if the time-series and the cross-section are large. We demonstrate the suitability of our method using an application from the financial economics literature.

The Impact of Export Volatility on Economic Growth in Algeria during 1992-2016: An Econometric Study

Objectives: The issue of export volatility in the economies of less developed countries (LDCs) is a significant topic of debate in economic literature. This paper aims to investigate the potential effect of export volatility on economic performance in Algeria. Methods: The study utilizes an econometric model to estimate the impact of export volatility on economic growth in Algeria for the period 1992-2016. Additionally, another regression model is used to analyze the effects of fluctuations in export prices and quantities on economic growth in Algeria. Results: The findings show that there is no significant relationship between the export instability index and real GDP. Conclusion: The study concludes that fluctuations in the prices and quantities of exports do not influence Algeria’s real GDP. Policymakers should reduce the dependency of the export sector on oil products and improve industrial performance in Algeria. Implementing price stabilization schemes and allocating more oil precautionary funds are also needed to mitigate any possible damaging effects of export volatility on Algeria’s economy in the future.

Recruiting mid-qualified workers in product-innovating firms: Which personality traits matter?

Change in the work context is an important characteristic of product-innovating firms, and the innovation's profitability often depends on the workers’ adaptive capability to cope with change. Personality traits shape the individual adaptive capability. Nevertheless, the current economic recruitment literature does not discuss personality trait-oriented recruitment in product-innovating firms. We investigate whether recruiters in product-innovating firms prefer mid-qualified job applicants with certain Big Five personality traits. We conduct a discrete choice experiment among 799 firms in Germany and use mixed logit models to estimate the heterogeneous personality preferences of recruiters by distinguishing between firms performing i) radical and ii) incremental product innovations. We find that recruiters prefer more emotionally stable workers regardless of the firm's innovation type. However, recruiters from firms engaging in radical innovations also prefer more conscientious applicants. Our findings have practical implications for firms, applicants and policy makers designing training curricula, because we show that recruiters from product-innovating firms consider personality trait-oriented recruitment not only for high-qualified workers but also for mid-qualified workers.

The politics of pro-outsider labour market reforms: a configurational study

AbstractOver the past decades, the level of regulation of fixed-term contracts has been in flux. Many reforms deregulating these contracts were followed by a regulatory countertrend, a puzzling finding considering influential theoretical expectations like the ones developed by the dualization and liberalization literatures. This paper draws on the comparative employment relations and comparative political economy literatures to identify the drivers of pro-outsider reforms. Furthermore, it develops an innovative argument claiming that governments may rely on support from a ‘domestic coalition’ including workers in permanent contracts, or they can leverage the European link to support their intention of conducting a pro-outsider reform. Each of these paths relies on the assemblage of distinct pro-reform coalitions of policy actors. To test our argument, the paper uses fsQCA. We compare 38 reforms enacted in 16 European countries between 1985–2019. After the fsQCA analysis, we conduct a qualitative discussion of the different paths.

Understanding Gen Z’s Climate Anxiety: A Look at the Latest Research

Nowadays, the widespread availability of information on climate change has made up-to-date knowledge in this area more accessible to a broad section of society. At the same time, this information overload can potentially threaten psychological well-being. In particular, a specific form of anxiety, commonly known as climate (change) anxiety, is a substantial problem. Although climate anxiety terminology only became commonplace a few years ago, the phenomenon itself has older roots. It includes several responses to climate change, the complexity of which assumes more detailed knowledge. The fact that climate disasters are becoming more common may generate intense negative emotions such as fear, depression, tension, and rage. According to current studies, stress derived from climate change is most prevalent among Generation Z. This generation group is the focus of researchers due to their outstanding environmentally conscious approach. They are possibly expected to make the most important decisions in the future, and worries about climate change may significantly influence their decisions. Researchers need to analyze the multiple causes of this phenomenon and the actions they induce. This economic literature review aims to summarize the main observations from the international literature in this field.