Mean Group Estimator Research Articles

The inflationary effect of the budget deficit: does financial sector development matter?

This study aims to examine the budget deficit–inflation relationship, considering financial sector development and broad money supply as moderating and mediating variables. For this purpose, a panel data set ranging from polled mean group, mean group, and dynamic fixed effect estimation techniques are employed. Hence, the pooled mean group estimation result reveals that the budget deficit is inflationary. In addition, GDP per capita, the effective exchange rate, financial sector development, regulatory quality, and the interaction term of the budget deficit and financial sector development are significant determinants of inflation. The study further examines the role of the broad money supply as a mediating variable in the budget deficit–inflation relationship. The structural equation model results and the mediation effect tests confirmed a partial mediation effect of the broad money supply on the budget deficit–inflation relationship. Based on the findings, it is recommended to strengthen regulatory quality, reduce broad money supply, and improve financial sector development. By doing so, we can create a more stable and efficient economy that benefits everyone in the long run.

Assessing the Impact of Technological Innovations and Trade Openness on Environmental Sustainability: An Empirical Study of South Asian Economies Using Panel ARDL Approach

This study examines the major factors that influence environmental sustainability over a 20-year period (2000–2020) in the four South Asian economies. In this study, two methods of estimation including the Pool Mean Group (PMG) estimator and the panel autoregressive distributed lag (ARDL) approach are used. The findings explore that trade openness, energy consumption, and economic expansion have a long-term positive and considerable impact on environmental deterioration, conversely technical innovation has a long-term negative impact on the environment. In short run scenario, trade openness and energy usage have significant and favourable effects on environmental degradation, whereas the economic growth and technological advancement have had a substantial negative influence on the environment. From this study, the policy makers provide the direction to the government by incentivizing technology, enforcing energy-efficient laws, promoting renewable energy, aligning trade policies with environmental goals, and enhancing regional cooperation. In order to improve South Asian environmental sustainable policies, future research should examine energy-trade-growth-technology by employing advanced techniques, and prioritizing innovation.

Advancing environmental sustainability in the G-7: The impact of the digital economy, technological innovation, and financial accessibility using panel ARDL approach

This study examines the impact of the digital economy, technological innovation, financial accessibility, and urbanization on CO2 emissions in the G-7 region from 1990 to 2019. The analysis employed Cross-Sectional Dependence (CSD) and Slope Homogeneity tests, revealing the presence of CSD issues and heterogeneous slope coefficients. First- and second-generation panel unit root tests indicated no unit root problem within the dataset, with variables showing mixed integration orders. Panel cointegration tests confirmed that the variables are cointegrated over the long run. To assess the short-run and long-run impacts of the explanatory variables on CO2 emissions, the study utilized the Panel Autoregressive Distributed Lag (ARDL) model. The findings indicate that the digital economy significantly reduces CO2 emissions, while economic growth, technological innovation, financial accessibility, and urbanization increase CO2 emissions in the G-7 region. The robustness of the Panel ARDL results was validated using Driscoll-Kraay standard errors, Augmented Mean Group (AMG), and Common Correlated Effects Mean Group (CCEMG) estimations. Additionally, the Dumitrescu-Hurlin causality test revealed a unidirectional causal relationship between the digital economy and CO2 emissions, GDP and CO2 emissions, and CO2 emissions and technological innovation. Furthermore, bidirectional causality was found between financial accessibility and CO2 emissions, as well as between urbanization and CO2 emissions. These findings provide comprehensive insights into the dynamic interactions between economic, technological, and environmental variables in the G-7 region, highlighting the complexity of achieving sustainable development.

The dynamics of financial development, environmental degradation, economic growth and population health in the Economic Community of West African States

Abstract By exploring the nexus between financial development and population health in the ECOWAS region we contribute to the debate on population health and also examine the direction of causality between population health and its determinants. We utilised a panel dataset of 11 ECOWAS nations from 1990-2019. The study used the augmented mean group (AMG) estimator to examine the long-run associations among the chosen variables. The empirical results indicate that financial development and economic growth are positive drivers of population health. The analysis also demonstrates that lower population health is associated with increased environmental degradation (CO2 emissions) in the ECOWAS region. However, regarding the country-specific analysis, the impact of the determinants of population health varied per country. The empirical estimates of the Dumitrescu Hurlin panel causality tests reveal a bidirectional causality between population health and its determinants. The empirical outcomes offer new insights for policymakers by means of financial development, environmental degradation, and income as economic tools to promote population health by guiding finance, growth, and environmental policies.

Are Natural Resources Harmful to the Ecology? Fresh Insights from Middle East and North African Resource-Abundant Countries

The Middle East and North African (MENA) region is among the regions most impacted by global warming and climate change. At the same time, the region accounts for 58% of global oil reserves and 43% of global natural gas reserves. It is, therefore, important to assess the role of natural resource abundance in the environmental degradation faced by MENA resource-abundant countries. This study contributes to this research area by exploring the short- and long-term repercussions of natural resources on the ecological footprint (EFP) of eight resource-rich MENA countries between 2000 and 2021. The research performs both aggregate and disaggregate assessments by considering the total resource rents, as well as specific rents of oil, natural gas, and minerals. The pooled mean group estimator indicates that a rise of 1% in total natural resources induces an increase of 0.053% in the EFP, implying that natural resources are harmful to the environment. The disaggregate analysis shows that oil rents have the most adverse environmental effects in the long run, followed by natural gas. Finally, mineral rents are determined to be neutral vis-à-vis the environment. In light of these findings, policy recommendations for reducing the adverse environmental impacts of natural resources are suggested.

Assessing long run asymmetric effect of urbanization, fossil energy consumption and regulatory quality on environmental degradation in the Black Sea Region: A dynamic analysis

Sustainable development policies of the Black Sea Region is vital to European Union given increasing environmental disturbances by dynamic and heterogenous factors across the enclave beginning from 1990s. This study assesses long run asymmetric effect of urbanization, energy consumption and regulatory quality on environmental degradation, with data from 1998Q1 to 2017Q4. First pooled mean group (PMG) estimates suggest short-run nonlinear and asymmetric effects of the independent variables on carbons emissions. Second, (i) long-run PMG estimates indicate improvements in regulatory quality reduces carbon dioxide emissions; (ii) increases in both urbanization and fossil energy consumption lead to corresponding rise in carbon dioxide emissions. Third, outcomes of Dumitrescu Hurlin causality estimates indicate (i) both fossil energy consumption and urbanization have unidirectional causal effects on carbon dioxide emissions; and (ii) increases in both urbanization and carbon dioxide emissions cause changes in regulations quality. These findings provide environmental regulatory insights for the Black Sea regions, especially to the European Union. Towards the future, the EU could ensure increased funding, research and policy inter-linking. Cooperation and formal exchanges among the economies in implementation of Danube River and Black Sea Conventions could be strengthened to preserve commercial marine resources; biodiversity and Habitat resources and reduce eutrophication. Additionally, fossil energy-guzzling industries could be regulated by the EU to use efficient technologies toward saving energy. To address urban-driven carbons emission across the region, economies across the region could invest in natural gas; while heavy investments are made in energy productivity.

Revolutionizing Banking: Neobanks’ Digital Transformation for Enhanced Efficiency

Changes in customer behaviors after the COVID-19 pandemic have encouraged the transformation of banking systems. Neobanks have emerged as an innovation and entered the banking system to compete with traditional banks by offering new customer experiences. Neobanks transform traditional banking products and services which are delivered through physical interactions into those delivered via digital channels. This paper analyzes traditional banks that have transformed into neobanks, specifically their efficiency after digital transformation. Efficiency was measured using Stochastic Frontier Analysis (SFA), as it is highly accurate in estimating efficiency scores. This study also used a Pooled Mean Group (PMG) estimation of the Panel ARDL (Autoregressive Distributed Lag), as this approach is useful for analyzing the relationship between variables in panel data, to investigate digital transformation as a determinant of neobanks’ efficiency and examine the existence of short-term and long-term relationships between digital transformation and efficiency. We found that the efficiency of neobanks increases after digital transformation. Furthermore, it can be concluded that digital transformation is a determinant of efficiency and that there is long-term relationship between digital transformation and efficiency. In the short term, digital transformation has a significant negative correlation with efficiency, but in the long term, it has a significant positive relationship; this is because the cost of digital transformation initially decreases the profit efficiency, but afterwards, it increases the efficiency.

Influence of fintech, natural resources, and energy transition on environmental degradation of BRICS countries: Moderating role of human capital

The rapid pace of economic development experienced by the BRICS countries is accompanied by increased carbon (CO2) emissions resulting from the excessive use of energy and natural resources. However, the emergence of recent technologies has led to the offering of efficient production methods with improved financing channels. This study analyzes the role of financial technologies, digitalization, natural resources, energy transition, and energy innovations on CO2 emissions. It also tests the moderating effect of human capital in BRICS countries from 1995 to 2021. Initially, Augmented Mean Group (AMG) estimation approach is applied to conduct empirical analysis. Due to asymmetric data distribution and non-linear relationships among variables, the Method of Moments Quantile Regression (MMQR) approach is also applied to estimate the effect of the variables across different quantiles of CO2 emission. The findings indicate that digitalization, financial technologies, energy transition, energy innovations, and natural resources reduce CO2 emission, whereas human capital increases it. However, the moderating effect of human capital on the association between digitalization, energy transition, and CO2 emission is significant and positive, indicating that human capital strengthens the negative impact of these factors on environmental degradation. Human capital does not significantly moderate the relationship of natural resources, financial technologies, and renewable energy innovations with CO2 emissions.

Technological Innovations and Financial Markets Development in Sub-Saharan Africa

The aim of this article is to assess the effect of technological innovations on the development of financial markets in Sub-Saharan Africa over the period 1996-2021. The study was conducted in 48 sub-Saharan African countries. The theory of financial intermediation (McKinnon, 1973 and Shaw, 1973) was used for the entire analysis process. This evaluation was carried out using the ARDL model with the Pooled Mean Group (PMG) estimator. In addition, we develop a composite index of financial development following the work of Čihák et al., (2012) and Svirydzenka (2016). The results from this analysis show that in the short term, all the variables of interest internet, landline and cell phone have no significant effect on the development of direct finance; although in the long term, internet and landline have positive and significant effects. These results argue in favor of investing in technological innovations that are capable of stimulating financial markets, and whose effects can have a positive impact ......

Do world uncertainty and income inequality moderate the efficacy of environmental innovation in driving global renewable energy generation?

ABSTRACT Environmental innovation is pivotal in tackling climate change by offering diverse and practical solutions to reduce carbon footprints, promote resource conservation, and enhance ecological sustainability. As anthropogenic activities continue to accelerate global environmental degradation, innovative solutions are imperative for mitigating the impacts of climate change and fostering sustainability. However, the effectiveness of these innovations is threatened by global uncertainties and rising income inequalities. Uncertainties in geopolitical landscape and economic disparities may impede the development and widespread adoption of eco-friendly technologies and practices. Given the above background, this study empirically investigates the influences of environmental innovation, world uncertainty and income inequality on renewable energy generation for a balanced panel of 58 countries between 1990 and 2020. The estimated models also control for the effects of globalisation and economic growth. After diagnosing for necessary panel diagnostic tests including cross-sectional dependence, heterogeneity, and panel unit-root, the Westerlund cointegration test confirms a significant long-run relationship between the variables of the study. Using panel Augmented Mean Group (AMG) estimation, the results reveal that while environmental innovation continues to promote the renewable energy generation, global uncertainty and income inequality hamper it. More importantly, the moderating effects of world uncertainty and income inequality reduce the favourable impact of environmental innovation on renewable energy generation. Besides, economic growth and globalisation continue to play critical roles in speeding up the quest for renewable energy. The PCSE estimation technique confirms the significance of these baseline findings. Potential policy implications are also discussed.

Impact of green technology and energy on green economic growth: role of FDI and globalization in G7 economies

With the increase in economic growth, the world is facing serious challenges concerning environmental sustainability. Hence, the green economic growth is imperative for sustainable and inclusive development. The objective of this study is to contribute to the existing literature about the factors that influence green economic growth. The study investigates the role of green technology, green energy, foreign direct investment, and globalization on green economic growth in G7 countries. The data of the study is collected from WDI, KOF Swiss Economic Institute, and OECD database and the data period ranges from 1995 to 2020. The existence of cointegration between the variables of the study was tested by Westerlund’s (Oxford Bull Econ Stat 69(6):709–748) cointegration test. Due to the presence of cross-sectional dependency, the study employed the cross-sectional autoregressive distributed lag (CS-ARDL) method to estimate the coefficients in the long and short run. The study also used a common correlated effect—mean group (CCEMG) estimator for robustness check. The findings of the study reveal that green energy and FDI positively contribute to green economic growth in the long and short run. The green technology also contributes positively to enhance green economic growth but only in long run. To accelerate green economic growth, G7 countries should incorporate policies promoting green energy and technology, while acquiring more foreign investments to ensure a sustainable development.

Higher Education and Unemployment in Turkey: Regional Panel Analysis with Undergraduate, Master's, and PhD Perspectives

In the past two decades, Turkey has experienced a noteworthy increase in the establishment of universities and enrollment of students across various degree programs. However, this surge in higher education has been accompanied by a growing number of unemployed higher education graduates. To address this phenomenon, this research conducts a comprehensive analysis of the relationship between different levels of tertiary education, undergraduate, master's, and Ph.D. (Doctorate) and unemployment. The study utilizes TurkStat's regional database, covering data from 26 provinces in Turkey spanning the years 2008 to 2021. Prior to delving into coefficient analysis, the Dumitrescu and Hurlin (2012) panel causality test was applied to identify the direction of potential causality and to establish an accurate model. The findings suggest a potential causal relationship running from being a higher education graduate, at all levels (bachelor's, master's, and PhD ), to unemployment rate. Subsequently, to further scrutinize this relationship in light of causality findings, the Panel Augmented Mean Group estimator (AMG) was employed. The results indicate that a 1% increase in the total number of Bachelor's degree graduates is associated with a 1.16% increase in unemployment rate. Based on these findings, it can be argued that, instead of further investing in higher education, a policy approach targeting middle-skilled jobs through advanced investment in vocational high schools may be more cost-effective.

The impact of antiretroviral treatment and child-focused unconditional cash transfers on child mortality

Although there is sufficient evidence in the epidemiological literature that antiretroviral treatment (ART) reduces child mortality, there is limited evidence of its effect in the socio-economic determinants of child mortality literature. Furthermore, evidence on the effect of child focused unconditional cash transfers (UCTs) on child mortality is limited, especially in the African context. Using South Africa's provincial level data over the period 2001 to 2019, we evaluate the effect of ART and child focused UCTs on child mortality. We use the two-stage instrumental variable mean group estimator. We find that ART reduces child mortality. Moreover, we find an inverted U-shaped non-linear relationship between UCTs and child mortality that is contingent to the level of cash transfer coverage. Our analyses also reveal that UCTs improve the effect of ART on child mortality by enhancing access and adherence to treatment. While the focus of our analyses was on the child mortality effects of ART and UCTs, our findings reaffirm the well-documented impacts of factors such as public health expenditure, HIV/AIDS, female education, and health worker density on child mortality. Collectively, the combination of high ART and UCTs coverage, increased public health expenditure, enhanced female education, and improved health worker density, represents value for money for policymakers and funders. These areas should be prioritised to improve child well-being.

Examining the relationship between the economic growth, energy use, CO2 emissions, and water resources: Evidence from selected MENA countries

Water shortage and food security concerns are amplified by the spread of irrigated cultures within the context of climatic unpredictability. In the hot, arid MENA area, the frequent drought periods and the continuous deterioration of water resources limits the ecological system's functioning and the sustainable agricultural productivity. Thus, this study aims to evaluate the potential impacts of the evolution of water resources management on the environmental components, using Westerlund’s (2007) panel cointegration and the Common Correlated Effects Mean Group (CCE-MG) estimator for a sample of six MENA economies over 35 years ((1990–2015). In the short run, there is unidirectional causality from agricultureadded value to CO2 and from water productivity to CO2 without any feedback. while, a bidirectional causality nexus was detected between energy consumption and CO2 emission In the long run, however, a feedback causality has been obtained between CO2 emissions, agriculture added value, water productivity, and energy consumption.Sustainable water management, smart water systems, and energy transition in the water related activities are highly recommended as priorities towards a NetZero carbon global economic trend.

Uncovering the dynamic relationship between oil prices and external trade in OECD countries

This study investigates the impact of oil price fluctuations on trade, including the exports and imports of goods and services, fuel exports and fuel imports. For this purpose, we employed a Pooled Mean Group estimator on the autoregressive distributed lag (PMG–ARDL) model. This approach helps investigate the short-run and long-run effects of oil price changes on trade indicators considering the difference of convergence path across countries while handling problems of endogeneity. This study examines a strongly balanced panel dataset of 34 OECD countries over the 26 years from 1995 to 2020. Overall, the findings indicate that rising oil prices have a positive and significant impact on all trade indicators. The results are consistent with the immediate and persistent influence of oil price fluctuations on trade. Nevertheless, the effects of other explanatory variables on trade vary across different trade indicators and in the short and long runs. From a policy perspective, it is vital to comprehend the appropriate policy responses to oil price changes to achieve the expected trade outcomes.

Toward sustainable climate action in advanced economies: Linking information communication technology, technological innovation, economic complexity, and ecological footprint

AbstractInformation and communication technology (ICT), technological innovation, and renewable energy (REN) consumption have been proffered as solutions to the recent environmental tragedies in developed countries. In recent times, ICT diffusion and technological innovation have improved in G7 countries, but the same cannot be said of REN consumption. As such, this study examines the link between ICT, economic complexity, technological innovation, REN, and ecological footprint (EF) for G7 countries over the period 1990–2020. We use three variables (fixed telephone subscriptions [FTS], mobile cellular subscriptions [MCS], and individuals using the internet [IUI]) to represent ICT. The presence of cross‐sectional dependence guides the use of second‐generation econometric methods for slope heterogeneity, unit root, cointegration, and parameter estimation. The augment mean group (AMG) estimator and panel OLS techniques are applied to complement the method of moment quantile regression (MM‐QR) approach. The MM‐QR results suggest that REN consumption and technological innovation impede the EF across all quantile levels (0.1–0.9), whereas economic growth and economic complexity augment the EF in G7 countries. The ICT variables have heterogeneous effects on the EF, suggesting that the impact of ICT on the EF depends on the estimation techniques and proxy for the variable. In line with these outcomes, public policies directed toward funding technological innovation projects are recommended. The funding should specifically focus on environmentally friendly technologies that can guarantee complementarity between reduced environmental damage and increased economic growth.

Effect of ICT and Urbanization on Economic Growth: New Insight from OIC Countries

ABSTRACT This paper examines the relationship between ICT, urbanization, and economic development. The context of the analysis is the Organization of Islamic Countries from 1997 to 2019. We develop an original empirical approach based on principal component analysis to generate ICT index. To mitigate any endogenous issue, we utilize the instrumental variable generalized method of moments. Further, we use pooled mean group estimation to check the short-run and long-run relationships between the variables. Our results have two significant implications. First, we demonstrate the favorable influence of ICT on economic growth in OIC nations in both the short and long term. Second, both urbanization and economic growth have a clear and substantial impact in the short and long term. Finally, our analysis supports the feedback hypothesis between ICT and economic growth. These novel empirical findings will help policymakers design ICT development policies to fulfill sustainable economic development in OIC countries.

Evaluating Environmental Sustainability in Africa: The Role of Environmental Taxes, Productive Capacities, and Urbanization Dynamics

This study examines the complex relation among environmental taxes, productive capacities, urbanization, and their collective effects on environmental quality in Africa, drawing on two decades of data from twenty African countries. It situates the study within the broader discourse on sustainable development and economic growth, emphasizing the Environmental Kuznets Curve (EKC) framework to examine the relationship between economic development, characterized by urban expansion and increased productive capacities, and the adoption of environmental taxes amidst the continent’s diverse economic and environmental environments. Using advanced econometric techniques, including the Cross-Section Augmented Autoregressive Distributed Lag (CS-ARDL) model and the Dynamic Common Correlated Effects Mean Group (DCCEMG) estimator, the study addresses data challenges such as cross-sectional dependence and slope heterogeneity. The results provide important insights into the dynamics of environmental quality in relation to economic and urban growth and the role of environmental taxation. The study proposes tailored policy strategies aimed at strengthening sustainable development initiatives in line with international agreements such as the Paris Agreement and the Sustainable Development Goals. These strategies advocate for a nuanced application of environmental taxes and the promotion of productive capacities to enhance environmental sustainability across the African continent.

What drives environmental sustainability? The role of renewable energy, green innovation, and political stability in OECD economies

ABSTRACT One possible way to achieve environmental sustainability is by addressing the issue of rising CO2 emissions, which significantly cause climate change by intensifying the greenhouse gas effect. The Organization for Economic Cooperation and Development (OECD), which substantially contributes to global CO2 emissions, necessitates a paradigm shift towards using clean energy sources and promoting green innovations to ensure environmental sustainability. Thus, this study aims to inspect the role of renewable energy use, green technology innovation, political stability, and fiscal decentralization in attaining environmental sustainability by limiting CO2 emissions for seven OECD economies from 2000 to 2019. This study has employed the ‘Cross-Sectional Augmented Autoregressive Distributed Lag and Augmented Mean Group Estimator’ for robust empirical analysis. The results indicate that renewable energy use, political stability, and fiscal decentralization can mitigate CO2 emissions and ensure environmental sustainability in OECD economies. In contrast, green technology innovation exhibits an insignificant effect on CO2 emissions. Furthermore, the moderation effects of fiscal decentralization and political stability exhibit a negative relationship with CO2 emissions. Notably, this study advises OECD nations to encourage regional cooperation to ensure political stability and devolution of fiscal powers to promote green innovation and renewable energy use to achieve sustainable goals.

The effectiveness of environmental protection policies on greenhouse gas emissions

In Canada, greenhouse gas (GHG) emissions continue to remain high despite the federal government's commitment to reduce GHG emissions. Environmental policy across Canadian provinces has largely lacked consistency with some provinces implementing targeted policy such as carbon taxes while others have strongly resisted the federal government's attempts to encourage such policy. This study examines the impact of environmental policy on GHG gas emissions across Canadian provinces with policy uniquely measured by public and business sector spending on environmental protection as well as notable province-specific policies. An extended STIRPAT model is specified with the inclusion of proxies for environmental policy using panel data from Canada's ten provinces from 1995 to 2019. The cointegration and the error correction modelling approaches are employed to estimate the non-stationary panel data. A pooled mean group estimation is applied to provide short run and long run coefficients. The findings indicate that although per capita GDP is the main driver of GHG emissions in Canada, environmental policy has a significant mitigating effect, as shown by the negative association between emissions and private and public sector spending on environmental protection in the long run. Furthermore, provinces with targeted policies, such as Ontario's coal phase-out and British Columbia's carbon tax, experienced significant emissions reductions. The theoretical implication is the successful addition of policy variables to the STIRPAT model, providing the model a new application for future research.