Long-run Impact Research Articles

Taiwan’s Rapid Demographic Shift: Examining the Long-run Impact of Population Ageing on Income Inequality

Taiwan distinguishes itself as one of the few Asian countries to experience demographic transition ahead of projections. Understanding how Taiwan’s rapidly evolving age demographics affect income inequality is crucial. Analyzing income inequality with three distinct metrics, we examine the relationship between population ageing and income inequality in Taiwan, using the augmented autoregressive distributed lag test. Our study reveals an inverse relationship, indicating reduced income inequality as the population ages. Factors such as elderly property acquisition, cultural norms favouring families to live together, and advancements in healthcare contribute to this trend. Encouraging elderly employment emerges as a crucial strategy to address income inequality among seniors. Additionally, economic factors like real gross domestic product per capita and trade openness show negative associations with income inequality, suggesting policy avenues for intervention. While outward foreign direct investment is positively associated with income inequality, promoting inclusive growth-focused foreign direct investment could help mitigate this issue. Overall, policies supporting economic growth and international trade hold promise for reducing income inequality in Taiwan.

Understanding the informal economy: The influence of political ideology during financial crises

This study investigates both the short- and long-run impact of different types of financial crises on the size of the informal economy, addressing the gap in the crisis-informality relationship. Using a sample of 320 financial crises in 146 countries over the period 1993–2020, we provide evidence that financial crises lead to a persistent increase in the size of the informal economy, confirming that the hidden economy serves as both a safety net for household income and a crisis amplifier. Rising unemployment and prolonged financial crises, especially debt crises, are mechanisms that explain these results. Left-wing governments’ policies, by promoting labour rights and protections, reduce labour market flexibility and consequently expand the informal economy during financial crises. These findings benefit policymakers by offering new insights into the crisis-informality relationship and the influence of political ideology.

Economic Strain and Recovery Trajectories in Mental Health: The Role of Financial Stability in Mental Health Outcomes

This study explores the intricate relationship between financial stability and recovery from mental health, and clarifies how economic security constitutes an essential feature that enhances mental health results. The study has used SPSS in quantitative analysis for regression analysis, ANOVA, cluster analysis, and structural equation modeling to explore the determinants of influential predictors and patterns in linking financial stability with mental health recovery. The regression outcome showed that financial stability substantially predicts recovery (? = 0.52, p < 0.01), and ANOVA indicated large differences in the scores of recoveries among the financial groups (F = 8.15, p < 0.05). Cluster analysis also indicated a difference such that the average score of recovery for high-stability participants was 8.5, while for low-stability participants it was 4.1. Thus, SEM shows both direct and indirect effects as it manifests that financial stability indeed reduces stress and encourages treatment adherence. The study concludes that economic security indeed plays a multifaceted role ranging from the access of mental healthcare through income support programs to resilience and overall well-being through the promotion of living a financial stability life. Recommendations should include income support programs, financial literacy programs, and integrated financial and mental health support services to form sustainable recovery. Further longitudinal researches, with larger and more diverse samples, should be conducted to study the long-run impact of financial stability on mental health trajectories and tailor policy interventions accordingly.

Unlocking sustainable futures: Exploring the non-linear linkages between green finance and environmental sustainability in developing countries

In an era characterized by growing environmental concerns and the urgent call for climate action, the role of green finance in addressing ecological sustainability has become a subject of paramount importance. Owing to this need, the current study examines the nonlinear relationship between green finance and environmental sustainability in 51 developing countries from 2000 to 2022. We employ various advanced panel estimation techniques, including Driscoll–Kraay standard errors (D-K), Feasible generalized least squares (FGLS), Generalized linear model (GLM), and System GMM to examine the long-run impact of this association. The results are further validated using a unique bootstrap quantile approach as a robustness check. We find a nonlinear inverted U-shaped relationship between green finance and environmental sustainability. We extend our analysis to lower-income and lower-middle-income countries and see that this nexus is stronger in middle-income countries than lower-income ones. Our findings also confirm the green finance based-EKC across the sub-samples of lower- and lower-middle-income countries. We also document that this nonlinear relationship is weak during the COVID-19 pandemic. This underscores the complexity of the investigated nexus, emphasizing the need for tailored strategies to foster a sustainable environment in developing economies.

The influence of economic determinants on CO2 emissions in Belt and Road Initiative (BRI) countries.

CO2 emissions in Belt and Road Initiative (BRI) countries are precisely influenced by economic determinants, requiring a comprehensive perspective. The BRI can augment its prospects for sustainable development by acknowledging the obstacles it faces and promoting global collaboration. Examining the CO2 emission (CO2e) in BRI countries in response to economic determinants such as financial development (FD), income distribution (ID), foreign direct investment (FDI), economic complexity index (ECI), and economic growth (EG) will determine the study's long-term and short-term impacts. This study introduces a novel concept of CO2es by employing panel data from 1991 to 2020. Thus, the CD, Kao, Pedroni, FMOLS, and pooled mean group-autoregressive distributed lag (PMG-ARDL) tests are utilized to assess cointegration. According to empirical findings, economic determinants (ECI, EG, FDI, and ID) have a statistically significant short-run and long-run impact on CO2e in BRI countries. Policymakers in BRI countries should integrate monetary development, FDI, and CO2es to foster EG, attract FDI, and promote sustainable development through regulatory frameworks.

IMPACT OF VOCATIONAL EDUCATION ON ECONOMIC GROWTH: AN ANALYSIS OF THE INDIAN ECONOMY

Vocational education can be seen as an important tool in leveraging India’s demographic dividend. Given the labor surplus in terms of the young population, it is important to examine how vocational education and training can serve as a critical driver of economic growth. This study aims at examining the impact of vocational education and training on economic growth in India, using the framework of the augmented Solow growth model by decomposing human capital into vocational education, along with primary, secondary and higher education. Using an ARDL model based on the annual data from 1990 to 1991 and 2019 to 2020, the study analyzes the short-run and long-run impact of vocational education. The results indicate that in the case of India, the impact of vocational education on economic growth is both a short-run and long-run phenomenon exhibiting a stable positive relation. Other control variables used in this study, such as Investment, Population, Openness and Inflation are found with a significant impact on economic growth. The study suggests that it is necessary to upgrade vocational education programs to create high-quality workers with a view to improving productivity and macroeconomic outcomes in India.

A Dynamic Analysis of Sustainable Economic Growth and FDI Inflow in Saudi Arabia Using ARDL Approach and VECM Technique

This study investigates the relationship between sustainable economic growth and foreign direct investment (FDI) in Saudi Arabia from 1980 to 2023. The ARDL approach and VECM technique are employed to analyze the short-run and long-run dynamics. The short-run results show mixed effects. Sustainable economic growth has a positive impact on current and one-period lagged FDI but a negative impact on the two periods lagged. Trade openness and infrastructure negatively affect FDI in the short run. Interestingly, oil rents and real economic growth also have negative short-run impacts on FDI, but these effects become positive with a longer lag. Long-run analysis reveals a negative relationship between trade openness, infrastructure, and oil rents with FDI, suggesting a potential crowding-out effect. Trade openness has a positive long-run impact on most variables, including sustainable growth, FDI, real growth, and CO2 emissions. Oil rents also have a positive long-run impact on these variables. This study finds six bidirectional causal relationships in the short run, primarily between trade openness, infrastructure, oil rents, and FDI. Unidirectional causality runs from oil rents, trade openness, exchange rate, sustainable growth, and real growth to FDI and infrastructure. Additionally, CO2 emissions cause FDI, and trade openness causes sustainable growth. While sustainable economic growth benefits FDI in the long run, short-term policies regarding trade openness and infrastructure require reevaluation. Oil revenue and real economic growth may initially deter FDI, but this reverses in the long term. To attract sustainable FDI, policymakers should focus on long-term economic growth strategies and consider reforms in trade and infrastructure policies. A comprehensive FDI strategy that moves beyond oil dependence and leverages trade openness is crucial to long-term economic diversification.

Impact of Foreign Direct Investment on Renewable Energy Consumption: Findings from Bootstrap ARDL with a Fourier Function

Renewable energy consumption (REC) is viewed to be a core component for delivering sustainable economic growth. It is broadly acknowledged that REC can significantly contribute to lessening the burden of carbon emissions on the environment and fostering economic progress. Although foreign direct investments (FDI) are perceived as a key catalyst of REC growth, in some cases they can cause negative effects on REC. While there are many studies in the literature exploring the effects of FDI on variables such as economic growth, employment and foreign exchange deficits, the amount of studies examining the effect of the said variable on REC is very limited. The existing study attempts to fill this knowledge gap concerning the relationship between FDI and REC in Türkiye. This research investigates the long-run impact of FDI on RECs in Türkiye for the period 1973-2022 using the bootstrap Fourier ARDL technique. Empirical analysis reveals that FDI affects REC negatively, while GDP has no effect. The study's conclusions confirm the Pollution Haven Hypothesis (PHVH) in Türkiye, suggesting that the country has emerged as a desirable destination for businesses seeking to relocate their operations and evade the strict environmental regulations in their home countries.

THE IMPACT OF DEBT SERVICE ON ECONOMIC GROWTH IN A SMALL ISLAND DEVELOPING STATE: A CASE STUDY OF ZANZIBAR

This study examines the relationship between Zanzibar's debt service and economic growth (GDP per capita) from 1987 to 2022. Employing a Vector Error Correction Mechanism (VECM) with time series data, we analyze the long-run impact of debt service on growth. While our results show a positive correlation, it's not statistically significant. This suggests that effective debt management, fostering investor confidence and stability, can potentially stimulate growth. The study emphasizes the importance of balanced debt strategies and informed policymaking for Zanzibar's sustainable development. It highlights the complexities of debt-growth dynamics, underlining the need for fiscal discipline and prudent debt management for long-term prosperity. This research offers valuable insights for policymakers navigating debt and economic policy in island economies.

Is temperature adversely related to economic development? Evidence on the short-run and the long-run links from sub-national data

We examine the effect of rising temperatures on regional economic development, using annual sub-national data for over 1500 regions in 152 countries between 1990 and 2017. In a panel setting with region- and country-year fixed effects, we find no evidence of a homogeneous or heterogeneous effect of rising temperatures on economic development as measured by regional per capita income. Additionally, we find no non-linear relationship between temperature and economic development. We also employ a long-difference approach that is attuned to exploring the long-run relationship between rising temperatures and regional income. Results indicate that rising temperatures have a negative long-run impact on regional per capita income for a minority of regions located in countries with weak economic, legal and political institutions. Furthermore, these vulnerable regions experience a decline in long-term population and human capital development. The use of alternative regional per capita GDP data from 1950 onwards yields similar empirical results. Our findings suggest that negative economic effects of temperature increase with time, only becoming apparent in the long run for regions in already disadvantaged countries. Thus, country-specific conditions may moderate regional economic vulnerability to future temperature increases due to global climate change.

Achieving sustainable development in ECOWAS countries: the impact of trade openness, poverty and human capital

This study investigates the relationship among trade openness, poverty, and human capital development in the pursuit of sustainable development across a panel of ten ECOWAS economies over a 34-year period (1987–2020). Specifically, it examines the roles of trade openness, poverty, and human capital development in sustainable development, while also exploring the moderating role of trade openness on the poverty-sustainable development relationship within the ECOWAS region. To conduct this analysis, the study employs panel autoregressive distributed lag (ARDL) using both the Pool Mean Group (PMG) estimator and Cross-Sectional Autoregressive Distributed Lag (CS-ARDL) techniques, taking into account cross-sectional dependence, cointegration, and other relevant diagnostic tests. The findings indicate that poverty has a consistent negative long-run impact on sustainable development, while human capital is positively associated with sustainability over the long term. Trade openness lacks a significant relationship with sustainability in both the short and long run. Inflation is insignificantly related to sustainability. Exchange rates demonstrate mixed effects. In terms of moderation, trade openness positively and significantly moderates the poverty-sustainability relationship in the long run but not the short run. Robustness testing using the AMG and P-OLS models further validates the significant positive impact of human capital and the insignificant effect of trade openness on sustainable development. Given poverty’s significant negative association and human capital’s positive link with sustainable development, the findings suggest the need for integrated policy mixes prioritizing multidimensional poverty reduction and human capability enhancement to promote sustainability objectives across both short- and long-term horizons in ECOWAS countries. Furthermore, prudent management of exchange rates and well-designed trade policies should complement these efforts to mitigate potential risks and harness any benefits for sustainability.

Natural resources utilization, digital technology, and green development expenditures can reduce environmental stress: A case study of emerging economies

The current study focuses on describing global environmental issues and the initiatives of higher authorities to resolve them. Therefore, the current research considers emerging economies to demonstrate the vital environmental factors from 2005 to 2022. However, the second-generation estimation strategy was utilized to investigate the long-run impact of natural resources, information & communication technology (ICT), research & development expenditures (R&D), human capital, openness, and financial development on carbon emissions. This empirical research utilizes a series of novel estimators to investigate the study objectives. In light of the study's findings, ICT, R&D, and human capital are all important factors contributing to environmental quality. However, natural resources, openness, and financial development increase emissions. Under the investigated outcomes, this study proposes some green policies to attain a sustainable environment shortly.

Examining Indonesian Stock Price Movement Amid COVID-19 Pandemic: Which Sectors that Underperformed the Most?

AbstractThe stock market is a financial market that is highly responsive to changes in economic conditions. Therefore, the stock market normally reflects the current economic conditions. This study discusses the effect of the COVID-19 pandemic on the Indonesian stock exchange in several industrial sectors. Using the event study method, this study utilized a time-series data over a five-month period starting from December 2019 to April 2020. To examine the short-run and long-run impact among the observed variables, this study also applied the ARDL (Autoregressive Distributed Lag). The findings showed that the COVID-19 pandemic affected stock performance, particularly in trade, service and investments, and agricultural sectors, all of which experienced a negative return on the day of the first announcement of the COVID-19 positive cases. In addition, the outbreak evidently influenced the cumulative abnormal return in the short run, but not in the long run. Keywords:Stock Market, COVID-19 pandemic, Event Study, ADRL, Cumulative Abnormal Return

Oil Palm Production in the 20th Century and Beyond: The Impact of Climate Change in Malaysia

The widespread concern about the devastating impact of climate change, especially in the agricultural sector, has become severe. This paper aims to explore and predict the impact of climate change on oil palm production using future climate conditions projected by the National Water Research Institute of Malaysia (NAHRIM). An error correction model (ECM) and autoregressive distributed lags (ARDL) cointegration approach were applied to assess the short-run and long-run impact of climate change on oil palm production. The estimated short-run coefficients disclosed that the oil palm own price and fertilizer use positively affected oil palm production in the second lag period, and increased acreage benefited oil palm production in the long run. The rainfall variable negatively affected the second lag period but positively rose oil palm production in the long run. The results of forecasting analysis revealed that SN1 (minimum climate variability), SN2 (maximum climate variability), and SN3 (average climate variability) would increase oil palm production by 5%, 1%, and 2%, respectively. Meanwhile, the oil palm yield would rise from 16.73 t/ha in 2020 to 16.89 t/ha in 2030 under SN1. However, with maximum rainfall, the yield would drop to 16.41 t/ha in 2030. Overall, climate change would likely reduce oil palm yield. This research could serve as empirical guides for policymakers and oil palm stakeholders in terms of practical and policy implications to adapt to climate change-related risks and uncertainties. The practical cover investments in technologies, such as developing drought-tolerant and early-maturity crop varieties, boosting water saving, and reducing evapotranspiration.

Economic Complexity and Good Governance in Sub-Saharan Africa: A Cross Country Analysis

The underlying problems of Sub-Saharan African development are a result of a crisis in governance. Over the years, issues of governance and economic development have been the focus of debate in academia. However, the existing literature has not adequately explored the association between good governance and economic complexity. The purpose of this study is therefore to investigate the short-run and long-run relationships between economic complexity and good governance in 27 Sub-Saharan African countries for the period 1996–2019 using the PMG-ARDL model. The findings reveal that economic complexity, foreign aid, and the Gini coefficient have a positive and statistically significant long-run impact on good governance in Sub-Saharan Africa. Thus, the null hypothesis that economic complexity has a significantly positive impact on good governance is accepted by these findings. The short-run dynamics results reveal that economic complexity and foreign aid have a negative and insignificant impact on good governance, while foreign direct investment, the Gini coefficient, and unemployment have a positive and insignificant impact on good governance in Sub-Saharan Africa. Based on the findings, it is recommended that policymakers in the region place more emphasis on structural transformations to transform their productive structures, which will ultimately lead to higher economic growth in Sub-Saharan Africa. Policies geared towards the diversification of exports (i.e., economic complexity) in the region for economic growth and development are also recommended.

Investor sentiment or information content? A simple test for investor sentiment proxies

This study suggests a simple test to assess the validity of employing a variable as an investor sentiment proxy by examining whether the variable exerts a long-run impact on prices. We also conduct the test using news sentiment indices for the U.S. and Korea, which represent a developed and influential market and a leading emerging market, respectively, as potential proxy variables. The test results, on the one hand, lead to a pessimistic view of employing news sentiment as a proxy for investor sentiment. On the other hand, the results also demonstrate a connection between news sentiment and investor sentiment, particularly in Korea. We suggest that a variable may not be appropriate as an investor sentiment proxy even when the variable is somewhat related to sentiment.

Impact of Climate Change on International Tourism Evidence from Baltic Sea Countries

The societal consequences of climate change are still hard to measure, mostly because it is difficult to connect the physical effects of climate change to economic processes and because future climate change and economic estimates are unpredictable. The tourism industry is one of the areas where evaluating the effects of climate change has proven to be especially challenging. The primary influencing environmental elements in the coastal waters of the Baltic Sea are expected to alter as a result of climate change. This study investigates the impact of climate change on the growth of tourism in the Baltic Sea Region, focusing on international tourism. To analyze the possible short-run and long-run impact of climate change on international tourism, a dynamic panel model is used, with data for the period 2005–2022. International tourism is measured through the inbound travel expenditure and the number of overnight visitors. The effect of climate change is captured through the variables of temperature and precipitation, with real GDP and government effectiveness as control variables. Results show a significant negative impact of climate change variables on international tourism in the Baltic Sea countries. There are relatively few studies on the impact of climate change on the tourism industry in the Baltic region; this article complements the existing literature on this very important issue.

Exploring the consequence of ecological and agronomic determinants on wheat production instabilities in Khyber Pakhtunkhwa, Pakistan: Perspectives from dynamic autoregressive distributed lag analysis

One of the major obstacles to agriculture is global climate change, which damages crop productivity through increasing temperatures and irregular precipitation patterns. Wheat, one of the most vital staple crops in the world, is particularly susceptible to these weather Therefore, understanding the fundamental relationship between wheat yield and climate is critical in developing effective adaptation and mitigation plans. The study aims to determine how unirrigated wheat yield evolves depending on the temperature, humidity, rainfall, rainfed areas, and fertilizer in Khyber Pakhtunkhwa, Pakistan. The Kripfganz method was used for p-value calculation, and the DYNARDL simulation model and the autoregressive distributed lag bound testing were used to analyze data from the Development Statistics of Khyber Pakhtunkhwa and the Pakistan Meteorological Department. Unit root analysis was used to check the stationarity of the time series. Then, DYARDL-bound Testing was used for long-run cointegration analysis among variables. The short-run influence of precipitation is substantial, but the long-run impact is not. Meanwhile, the use of chemical fertilizers does not influence yields in either the short or long run. In addition, neither short-run nor long-run yields are statistically significantly connected with the highest temperature. The DYNARDL simulation model reveals precipitation, rainfed-area, and fertilization shocks in the long and short run. The 10 % positive and negative shocks in DYNARDL simulations are supplemented with graphical interpretations of the impact on yield. The study results may have significant implications for policymakers and management professionals in the agriculture sector in Khyber Pakhtunkhwa.These findings can inform the development of strategies to mitigate the impacts of climate change on wheat yields, ultimately enhancing food security and agricultural sustainability in the region.

Pirate attacks and the shape of the Italian urban system

From the sixteenth to the early nineteenth century, coastal areas of Italy (especially, in the south-west) were subject to attacks by pirates launched from the shores of Northern Africa. This paper studies the long-run impact of these events. We show that in areas that were more exposed to raids, easier-to-defend but less productive locations ended up in being relatively more populated. The consequences of pirates’ attacks were still visible in the first part of the twentieth century and ceased to be statistically significant after the 1960s.

Fiscal Policy and Economic Growth Nexus: Evidence from Zambia

Purpose: This study examines the short-run and long-run impact of the expansionary fiscal policy on economic growth in Zambia from 1991 to 2021. Materials and Methods: The study employs the Vector Error Correction Model (VECM) and Auto Regressive Distributed Lag (ARDL) Models to examine the short-run and long-run impact of total public expenditure, total tax revenue and total public debt time series data on the gross domestic product (GDP) of Zambia from 1991 to 2021. The Keynesian theory informed our study, which presupposes that the unemployment problem might be solved by boosting government spending on consumption and that government spending was an exogenous factor that contributed to economic growth (Keynes, 1936; Singh & Sahni, 1984). Findings: Both the VECM and ARDL Models show the existence of statistically significant long-run cointegration among public expenditure, external debt, tax revenue and GDP. Specifically, VECM estimates show that for a 1% increase, Tax revenues have a positive long-run significant effect on Zambia’s economic growth of 3.36%, while external debt and public expenditure have significant negative effects on the economic growth of 1.17% and 0.003% in Zambia respectively. The ARDL model estimates indicate that, in the short run, an increase in tax revenue of 1% increases GDP growth by 1.92%, while a rise in government expenditure and external debt by 1% results in a decline in Zambia’s economic growth by 0.003% and 6.14% respectively. Implications to Theory, Practice and Policy: Given the foregoing findings, the therefore study recommends that the Government of Zambia should widen the tax base to mobilize more tax revenues and reduce the budget deficits emanating from high government expenditures. External public debt should also be reduced.