Long-run Impact Research Articles

Automobiles and urban density

Abstract How has the rise of the automobile influenced urban areas over the past century? In this paper, we investigate the long-run impact of car ownership on urban population density, based on a sample of 232 city observations in 57 countries. Using the presence of a domestic car manufacturer in 1920 as a source of exogenous variation, our IV estimates indicate that car ownership substantially reduces density. A one standard deviation increase in car ownership rates causes a reduction in population density of around 35%. For employment density, we find almost identical results. This result has important implications for vehicle taxation, car ownership growth in developing countries, and new transport technologies such as automated vehicles.

Impact of public debt profile on economic growth: Evidence from Nigeria

An excessive increase in public debt characterizes the contemporary development of the global economic and financial system. The paper aims to examine the short- and long-run impact of state debt on economic growth in Nigeria. The model was estimated using an autoregressive distributed lag (ARDL) bounds testing method to co-integration for the long-run investigation. At the same time, the contemporaneous dynamics were explored using an unrestricted error correction model. The data were collected from the Central Bank of Nigeria’s statistical bulletins and annual reports, and it spanned the years from 1990 to 2020. The study uncovers evidence of a long-term link between the study variables. In addition, the study finds that all the explanatory is statistically significant. Specifically, economic growth is significant and negatively responsive to changes in external debt by 0.19% and debt servicing by 0.07%, contrary to its positive response to changes in domestic debt and exchange rate by 0.27% and 0.18%, respectively. The paper, therefore, recommends that government may consider more domestic borrowings to foreign borrowings that should only be resorted to when it is indispensable. Moreover, the government should also strive to balance loan servicing and the economic sustainability.

Striving towards sustainable development: how environmental degradation and energy efficiency interact with health expenditures in SAARC countries.

The previous studies focused on environmental issues, identifying their root causes, urging prompt action to reduce environmental degradation. In this context, the current article extends the literature by incorporating the ecological impacts on the health sector and the role of sustainable development. The present study adds to the body of knowledge by examining the relationship between CO2 emissions, sustainable development, energy efficiency, energy intensity, and health expenditures for SAARC countries from 2000 to 2020. Fully modified OLS (FMOLS) and dynamic OLS (DOLS) are used and diagnostic tests to check the association between the variables. The empirical analysis validated the long-run impact of the examined factors on health expenditures. The results show that energy efficiency and sustainable development have a statistically significant negative effect on health expenditures, vice-versa for CO2 emission. Energy efficiency, energy intensity, and CO2 emissions have been shown to have a one-way causative relationship with health expenditures, but sustainable development and economic growth have a two-way causation relationship. The better health status of the SAARC economies necessitates the establishment of long-term development strategies, environmental sustainability, and an examination of the energy sector. This work’s conceptual and empirical advances have significant policy ramifications for this part of the globe and its efforts to improve sustainability.

Impact of Economic Uncertainty on Foreign Direct Investment Inflows of Sri Lanka

Foreign direct investment is the heart of economic growth. Sri Lanka faces foreign reserve shortage. Therefore, the researcher studied how foreign investors react on investment flows of Sri Lanka under world, regional, and domestic uncertainty situations of Sri Lanka. The researcher studied on impact of economic uncertainty on foreign direct investment inflows using world, regional and domestic uncertainty indexes which are newly constructed indexes. This study has been used quantitative analysis for impact on economic uncertainty on foreign direct investment inflows of Sri Lanka. The researcher used secondary data for the sample period of 1st quarter, 1996 to 4th quarter, 2019. The researcher used the autoregressive distributed lag model, error correction model for analyzing the short-run and long-run impact on economic uncertainty on FDI inflows of Sri Lanka. Regional economic uncertainty has a significantly impact on foreign direct investment inflows of Sri Lanka in short run and long run. In domestic economic uncertainty has significantly impact on foreign direct investment inflows of Sri Lanka in short run and long run. However, World economic uncertainty has not significantly impacted on foreign direct investment inflows of Sri Lanka This study has used world, regional, and domestic uncertainty of Sri Lanka indexes, which were newly built to capture uncertainties. Findings of the study could be used for the changes of policies to attract foreign direct investment inflows of Sri Lanka.

Disruption of Life Insurance Profitability in the Aftermath of the COVID-19 Pandemic

Life insurance profitability depends on reliable mortality risk projections and pricing. While the COVID-19 pandemic has caused disruptions around the world, this is a temporary mortality shock likely to dissipate. In this paper, we investigate the long-run impact of COVID-19 on life insurance profitability. Due to the long-run dynamics of the mortality characterised by a decreasing effect of the COVID-19 mortality acceleration, we suggest proactive mortality risk management by implementing prompt premium adjustments, in order to increase the resilience of the business.

US Fiscal Stimulus and Value of Dollar

Our study examines the impact of government stimulus spending on the US dollar’s exchange rate. We apply the VECM model on US data from 1980 to 2020 with US dollar’s exchange rate as the dependent variable and the quantity of domestic money supply, amount of domestic government purchases, quantity of money supplied by the foreign country (China), and the foreign country’s output as independent variables. Our study finds that, while the long-run impact of US fiscal stimulus spending on the dollar’s exchange rate is negative, it has no effect in the short run. Also, the coefficient associated with the error￾correction term, ECT, is negative but insignificant at 5% significance level, which implies that any short￾term fluctuation in the US dollar’s exchange rate will not be adjusted toward its long-run value.

Threshold Effects of Oil Price and Oil Export on Trade Balance in Africa

The impact of various macroeconomics variables on trade deficit has been studied in large OPEC (e.g., United Arab Emirates and Kingdom of Saudi Arabia); however other African countries are still needed to be studied. This study uses the transmission oil price (OP) changes to various economic sectors to examine the threshold effects of OP and oil export on trade balance in African OPEC members (Algeria, Angola, Libya and Nigeria). This study applied Pedroni cointegration test to establish the cointegration relationship among different macroeconomics variables by using three different proxies of OP. The dynamic panel models were used to examine the long-run impact of OP changes and threshold analysis. The study found that increase in OP and oil export positively encouraged import while exchange rate depreciation is significantly discouraged import. The study found that the threshold effect of oil export on the trade balance, when oil export is above a certain threshold, the impact is higher than below threshold. The aforementioned countries have to take into account that there is a threshold level and can increase oil export to improve the trade balance.

Determinants of Migration: Cotton Strikes and Income Shocks in Mali

How do transitory income shocks affect household migration decisions in low-income countries? We study how income losses from a cotton strike affecting Malian districts differentially changed agricultural household migration choices. The short duration and geographic specificity of the strike allows us to cleanly identify the long-run impact of a sudden change in household income on migration choices. We show that a drop in income precipitated by the strike reduced household migration rates by approximately 32% over a six-year period. A randomized inference placebo test corroborates the validity of our result. We demonstrate that not having cash on hand is a binding constraint to labor migration for poor populations.

Real deposit rate and credit supply nexus in ECOWAS

The relationship between real deposit rate and credit supply is interrogated with panel data (1980–2015) from ten Economic Community of West African States (ECOWAS) using dynamic common correlated effects mean group (DCCE-MG) and pooled mean group (PMG) estimators. The results show that real deposit rate has a linear positive long-run impact on credit supply for the full and sub-samples of Communauté Financière d'Afrique (CFA) and non-CFA franc countries, while at country levels, the relationship is mixed with varying signs. Similarly, the Dumitrescu–Hurlin non-causality (2012) test shows that real deposit rate Granger-causes credit supply in the long run. Overall, the findings support the McKinnon (Money and capital in economic development, 1973) and Shaw (Financial deepening in economic development, 1973) hypothesis that interest rate is an essential ingredient in the intermediation role of the financial system and suggests that depositors are incentivised to give up present consumption by saving at high deposit rates.

IMPACT OF MACROECONOMIC BEHAVIOUR ON DEPOSIT MONEY BANK LIQUIDITY IN NIGERIA

<p>According to Keynes (1936), money is the most liquid asset. Liquidity is an attribute to an asset. The more quickly an asset is converted into money the more liquid it is said to be. Purpose: this study was carried out to determine the long-run and short-run impact of macroeconomic behaviour as measured by money supply, exchange rate, real interest rate, and credit to the private sector on deposit money bank liquidity in Nigeria as measured by liquidity ratio; using annual time-series data ranging from 1990 to 2020. Methodology/Technique: the purpose of this study was achieved by the application of Autoregressive Distributed Lag Technique (ARDL) together with Augmented Dickey-Fuller and Phillip-Peron Tests. Findings: it was revealed that the liquidity ratio converged with 3.17% to long-run equilibrium after a shock to explanatory variables. It further displayed that the current level of money supply and real interest rate had a negative but significant impact on liquidity ratio, whereas, one-year lag and two-year lag of money supply, real interest rate, and exchange rat positively impacted liquidity ratio in both long-run and short-run. Conversely, it was revealed that one-year lag, two-year lag, and three-year lag of credit to the private sector had a negative and insignificant impact on liquidity ratio in the long-run, while it negatively and significantly impacted liquidity ratio in the short-run. Conclusion/Policy Recommendations: As a result of the findings, the study recommended that government policies that will enforce sustainable and efficient liquidity ratio be made feasible in the banking sector.</p><p> </p><p>JEL: E10; E20; E40</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/edu_01/0920/a.php" alt="Hit counter" /></p>

THE NONLINEAR ASYMMETRIC RELATIONSHIP AMONG IMPLIED VOLATILITY INDICES OF INDIAN STOCK MARKET, GOLD, AND OIL: EVIDENCE FROM NARDL MODEL

The paper aims to examine the nonlinear asymmetric relationship among the implied volatility indices of the Indian stock market, gold, and oil for the period from 2nd March 2009 to 29th October 2021. Nonlinear Autoregressive Distributed Lag (NARDL) model results provide evidence of asymmetric nonlinear relationship among the selected variables in the short-run and the long-run. The positive and negative shocks to gold and oil implied volatility indices have a positive and significant influence on the implied volatility of the Indian stock market. The expected volatility of gold has a short-term symmetric impact on expected stock market volatility in the short run. Whereas, the implied volatility of oil has a long-run asymmetric impact on the implied volatility of the stock market. Increasing volatility in oil prices can be viewed as a signal for the starting point for the volatility of the Indian stock markets. In the long run, positive shocks to gold volatility have more impact on the expected volatility of the Indian stock market than the negative. This indicates that investors are shifting their investments from gold to stocks for higher returns when the gold prices are fluctuating.

Testing the long-run impact of economic growth, energy consumption, and globalization on ecological footprint: new evidence from Fourier bootstrap ARDL and Fourier bootstrap Toda-Yamamoto test results.

The aim of this study is to investigate the impacts of economic growth, energy consumption, and the economic globalization process on ecological footprints in the top 10 countries that cause the highest carbon dioxide emissions in the world. The analyses were conducted on annual observations from 1970 to 2017 (a different range for each country) employing the Fourier bootstrap ARDL cointegration method developed by Yilanci et al. (2020) and the Fourier bootstrap Toda-Yamamoto causality method developed by Nazlioglu et al. (2016). In the cointegration approach, an additional F-test provides better insights to define degenerate cases and the bootstrap test performance is powerful than the asymptotic test. In this context, Fourier bootstrap ARDL test results revealed that there is a long-term relationship between ecological footprint and economic growth, energy consumption, and economic globalization in seven countries-namely, Canada, China, Germany, India, Indonesia, Iran, and Saudi Arabia. According to long-run coefficients, in general, economic growth and energy consumption have negative effects on ecological footprint, whereas economic globalization has a positive effect on the ecological footprint for these countries. To evaluate it more specifically, (i) real gross domestic product per capita has positive and statistically significant coefficients on the ecological footprint in China, India, Indonesia, Iran, and Saudi Arabia, except for Germany. (ii) Energy consumption per capita also has positive and statistically significant coefficients on the ecological footprint in China, Germany, Iran, and Saudi Arabia, except for Indonesia. (iii) Finally, the economic globalization process has negative and statistically significant coefficients on the ecological footprint in Canada, China, India, and Saudi Arabia, except for Indonesia. On the other hand, Fourier bootstrap Toda-Yamamoto causality test results show a mixed character. Governments should take action to reduce the negative effects of the climate crisis as immediate as possible, which has been widely expressed recently. Among these, increasing the use of renewable energy sources and new carbon-free technologies in the production process appears as important policy tools.

Asymmetric impact of financial development, trade openness, and environmental degradation on economic growth in Venezuela.

This study assesses the asymmetric impact of financial development, trade openness, and environmental degradation on economic growth in Venezuela between 1980 and 2019 using the nonlinear autoregressive distributed lag model. Findings from the bounds test indicate the presence of cointegration between the series in the model. Further findings from the study showed evidence of a significant negative long-run impact of negative shocks to financial development on long-run economic growth, thereby confirming that declining financial development hinders economic growth in Venezuela. Furthermore, positive and negative shocks of trade openness show a positive impact on economic growth in the long run. Meanwhile, in the short-run, negative shocks to financial development negatively impacts economic growth, while one year lagged negative shocks to financial development improve the short-run economic growth. More so, results from the long-run asymmetric test reveal that only financial development has a significant asymmetric effect on economic growth. However, errors to the system are adjusted at a speed of 38%. This study, thus, recommends the improvement of the financial sector and removing barriers to trade where possible, while adopting low carbon emissions for economic growth.

Do Oil Price Shocks Affect Exchange Rates in Oil-importing Countries: A Case of the Zambian Economy using the SVAR Approach

Oil price shocks have been argued to impact Real Effective Exchange Rates (REERs) in net oil importing countries, mostly through the wealth-transfer effect, which involves the transfer of wealth from net oil-importers to net oil-exporters, and the Terms of Trade Channel. Since this analysis had not been done for the Zambian case by decomposing oil price shocks, a Structural Vector Autoregressive Model (SVAR) was used to measure the contemporaneous impact of oil price shocks on REERs, and was complemented by Impulse Response Functions (IRFs), Granger Causality Tests and Forecast Error Variance Decomposition (FEVD). The long-run impact was analyzed by the Vector Error Correction Model (VECM) after satisfaction of cointegration requirements. The findings revealed that decomposed oil price shocks had no short-run contemporaneous impact on REERs at the 5% level. Similarly, it was found that decomposed oil price shocks and the combined effect of all the variables in the system did not granger-cause Zambia’s REERs, while FEVD results showed that oil price shocks were attributed for a minute proportion of the variation in REERs. These findings were attributed to Zambia’s profile as a predominantly copper and cobalt exporter, historic exchange rate controls, fuel subsidies, and price controls. Johansen’s cointegration test revealed the existence of at least one cointegrated equation in the system, so the subsequent VECM which was constructed revealed that decomposed oil price shocks had no long-run impact on REERs in Zambia, but that the Error Correction Term (ECT) which measures the speed to adjustment back to equilibrium after a short-run disturbance, was significant.

Inform Me When it Matters: Cost Salience, Energy Consumption, and Efficiency Investments

Effective attention to information may play a prominent role in consumer choice for energy-intensive services and it may simply be a function of receiving timely information when consumption takes place. This paper investigates whether and why the timing of utility bills leads to salience bias in heat energy consumption. In Germany, the 12-month billing period varies across buildings with a significant share of buildings receiving bills during the summer months, when the salience of heating costs is absent or low. I exploit this large-scale natural experiment in utility billing cycles at the building level to identify the salience effect of costs on energy consumption and the underlying heterogeneity in the average treatment effect. I find new evidence for consumer inattention to energy costs: consumers that are billed for heating during off-winter months demand more heat energy annually. Results suggest that households are paying attention to their heating costs in the first three months of the 12-month billing period. As a result, bills immediately before the winter heating season are most effective, allowing ample opportunity to adjust consumption. I show that salience bias in consumption is persistent and pervasive – affecting households in all regions and building/technology type. Engaging energy users with salient bills, not necessarily more frequent, has the potential to reduce energy consumption in the residential sector significantly. This paper further examines whether enduring differences in consumer inattention to energy costs had a long-run impact on thermal efficiency investments by building owners – with implications for the energy-efficiency gap.

Asymmetric Linkages of Oil Prices, Money Supply, and TASI on Sectoral Stock Prices in Saudi Arabia: A Non-Linear ARDL Approach

This study examines the asymmetric effects of oil prices, money supply, and the Tadawul All Share Index (TASI) on sectoral stock prices in Saudi Arabia. By applying a nonlinear auto-regressive distributive lag (NARDL) approach to monthly data spanning from January 2007 to December 2016, we found that the positive shocks of oil prices were more than the negative ones in the building and construction, energy and utilities, and petrochemical sectors, while higher oil prices adversely influenced the stock price of the bank and financial service sector. We identified the long-run and short-run asymmetric relationships of the Saudi stock market development on the stock prices of bank and financial services, energy and utilities, and the petrochemical sector and only a long-running asymmetric relationship with the building and construction sector. We also found the absence of long-run and short-run asymmetric impact of money supply on three sectors, namely, building and construction, energy and utilities, and the petrochemical sector except for the bank and financial service sector where only a long-running asymmetric relation was observed. These findings are appropriate for investors and portfolio managers to make judicious investment decisions. Policymakers should diversify their economic sectors apart from the oil dependencies to achieve the Vision 2030.

THE ROLE OF POLITICAL AND INSTITUTIONAL FACTORS ON ECONOMIC FREEDOM: EMPIRICAL EVIDENCE FROM PMG ARDL MODEL ESTIMATION

This study focuses on investigating the political and institutional factors that impact economic freedom. The factors addressed for the study are those that have resulted in disputed outcomes in prior works— but have not been evaluated holistically. Using annual data collected from 2003 to 2017, a panel ARDL technique was performed for 17 nations to examine both the short-run and long-run impact of political and institutional factors. The results of the study suggest that government effectiveness and political stability have a favorable impact on economic freedom, but government size is not. Furthermore, the study shows that corruption has a detrimental impact on economic freedom. The most likely answer is that corruption is not grease for the economic system’s wheels. Surprisingly, the findings suggest that democracy has a negative influence on economic freedom. Hence, as a policy implication, there is a necessity to improve institutions’ effectiveness, reduce government size and provide political stability to construct economic freedom on economies.

Making it Home? Evidence on the Long-Run Impact of an Intensive Support Program for the Chronically Homeless on Housing, Employment and Health

Making it Home? Evidence on the Long-Run Impact of an Intensive Support Program for the Chronically Homeless on Housing, Employment and Health

Temporary Prosperity or Sustainable Development the Long-Run Impact of Developing Pollution Intensive Industries

Temporary Prosperity or Sustainable Development the Long-Run Impact of Developing Pollution Intensive Industries

Investigating the Long-Run Impact of the Earned Income Tax Credit on Maternal Health

Investigating the Long-Run Impact of the Earned Income Tax Credit on Maternal Health