Panel Smooth Transition Regression Approach Research Articles

Does the material recycling rate matter in the effect of the generated waste on environmental pollution? Panel smooth transition regression approach

This study examined the effect of material recycling on the relationship between the waste amount and environmental pollution in EU-15 countries for the 1995-2019 period through panel smooth regression analysis by using the material recycling rate as the threshold variable. Based on the analysis results, the material recycling rate threshold level was estimated as 11.79. In these countries, if the material recycling rate is below the threshold level, the rise in the waste amount will increase environmental pollution. If the material recycling rate is above the threshold value, the rise in the waste amount will still increase environmental pollution, but the pollution increase rate will decrease. With the increase in the waste amount in the long term, environmental pollution can only be reduced by raising the material recycling rate. For the reduction of environmental pollution, which is one of the most prioritized issues in Europe in recent years, policy makers should take measures to increase the material recycling rate by taking the results of this study into consideration and pay attention to the implementation of these measures.

Corruption in Arab countries: a grease or sand in the wheel of economic growth? a panel smooth transition regression approach

The relationship between corruption and economic growth has long been dealt with in the literature. Yet, no consensus has been drawn about the way how corruption might affect economic growth. This paper aims at revisiting the relationship between corruption and growth in the context of Arab countries using a panel threshold model with smooth transition (PSTR). The study covers 14 Arab countries over a period from 2007 to 2017. Our results show that the institutional quality variable divide the sample into two regimes. In the first regime (low institutional quality), reducing corruption risk hinders economic growth. The second regime (high institutional quality) stipulates that a lower risk of corruption will have a positive effect on economic growth. The results on a country basis reveal two heterogenous groups and one homogenous group in terms of hydrocarbons endowment: (1) Algeria, Egypt, Jordan, Lebanon Sudan ,Syria and UEA are in favor of “grease in the wheels” hypothesis, (2) Bahrain, Kuwait, Morocco and Tunisia demonstrate “the sand in the wheel” hypothesis and (3) Oman, Saudi Arabia and Qatar showed a strong support toward “the sand in the wheel” hypothesis.

Threshold effects of technology import on industrial employment: a panel smooth transition regression approach

The relationship between imported technology and employment is a controversial issue. This study aims to test the hypothesis that the relationship between imported technology and employment is non-linear and evolves with the level of technology imports. The study covers two groups of developed and developing countries over the period 2000–2019. The Panel Smooth Transition Regression (PSTR) model is used to estimate the technology import threshold and its impact on industrial employment. The study finds a positive relationship between imported technology and industrial employment for technology import rates above the 13.667% threshold, above which imported technology begins to improve industrial employment in developed countries. In contrast, for developing countries, the results showed a negative relationship between imported technology and industrial employment for technology import rates above the 3.44% threshold above which imported technology begins to reduce industrial employment. These results suggest that the threshold level of technology imports can be considered as an indicator for promoting innovation policies in both developed and developing countries to minimize the negative effect of process innovation resulting from imported technology.

Identifying heterogeneous flexibility of dairy farms using a panel smooth transition regression approach

Abstract Our objective is to identify the individual flexibility of dairy farms, which may be the result of heterogeneous input adjustment costs, based on their observed short-run responses to price variations. For this purpose, we propose an analytical framework based on the panel smooth transition regression model with farm-specific threshold parameters. Our model is estimated using data from a sample of French dairy farms over the period 2007–2018. Our empirical results reveal heterogeneous levels of flexibility for these farms, with the most flexible farms appearing to be more autonomous both financially and in terms of animal feed.

Fiscal outcomes, current account imbalances, and institutions in Europe: Exploring nonlinearities

We analyze the fiscal outcomes associated to the current account imbalances within Europe. We hypothesize that the effects of current account imbalances on fiscal variables within the European Union are nonlinear and that the nonlinearity is modulated by the quality of governance. We use data on 28 European Union countries from 2000 to 2019, apply a Panel Smooth Transition Regression (PSTR) approach and proxy governance by measures of corruption. We find evidence of a nonlinear relationship: the fiscal effects related to current account imbalances are differentiated among European countries. On the one hand, we find a positive elasticity of fiscal balance to current account balance when the quality of institutions is low. This suggests that in countries with high corruption, a deterioration of the current account results in a degradation of fiscal balance and an increase of debt. On the other hand, we find a negative elasticity of fiscal balance to current account balance when the quality of institutions is high. This implies that in countries with low corruption, larger current account imbalances can be related to an improved fiscal balance and a lower debt. Robustness checks comfort our findings.

Correction: Non-linear Threshold Effect of Governance Quality on Economic Growth in African Countries: Evidence from Panel Smooth Transition Regression Approach

Correction: Non-linear Threshold Effect of Governance Quality on Economic Growth in African Countries: Evidence from Panel Smooth Transition Regression Approach

Tourism development and housing price: An interplay

This study underscores the significance of the nexus between tourism and housing price. Using panel data from 35 major cities in China, it employed the panel smooth transition regression approach to explore the interplay between tourism development and housing prices. Our findings showed a nonlinear tourism–housing price nexus. Specifically, tourism development can raise housing prices in a nonlinear way, indicating that this positive impact varies at different levels of tourism specialisation. Housing prices had an inverted U-shaped effect on tourism development. Several explanations for these empirical results are provided in the Discussion section, along with policy suggestions.

The nonlinear nexus between renewable energy consumption and economic growth in OECD countries: evidence from PTR and PSTR estimates

PurposeToday, the increasing use of fossil fuels, energy security, concerns and the great importance of achieving sustainable economic growth underscore the urgent need to transition to a green energy system as soon as possible. To shed light on the relationship between the economy and renewable energy, this study assesses the nonlinear relationship between renewable energy consumption and economic growth for 24 OECD countries between 1990 and 2015.Design/methodology/approachThe authors apply two nonlinear models: panel threshold regression (PTR) and panel smooth transition regression (PSTR).FindingsThe results show that the positive effect of renewable energy consumption on economic growth is conditional. On the one hand, the results of the nonlinear PTR model yielded a threshold value for renewable energy consumption of about 251.17. Below this threshold, the authors find a negative impact of renewable energy consumption on economic growth. However, above this threshold, renewable energy consumption becomes a favorable source of economic growth. Using the nonlinear PSTR model based on the gamma transition parameter of 2.014, the transition from low renewable energy consumption regime to higher is abrupt.Originality/valueReferring to previous studies analyzing linear causality between renewable energy and economic growth, most of the results show various mixed and non-stable effects over the study period. The contributions of this study consist in conduct a series of empirical tests of the nonlinear effects of renewable energy use on economic growth using two nonlinear approaches such as the PTR and PSTR models. If the authors show that such a relationship is nonlinear, it is essential to check whether the transition from one weak regime to another strong regime is abrupt or smooth, using the PSTR approach.

Corruption, imported innovation, and growth: Evidence using the panel smooth transition regression approach for developing countries

AbstractThis article investigates the nonlinear relationship between corruption, imported innovation (imports of high technology), and economic growth in developing countries from 2009 to 2018. We used a sample of 38 countries divided into two subsamples. The first covers 21 African countries, and the second covers 17 non‐African countries. The empirical results from the panel smooth transition regression model indicate that there is a threshold effect in the two relationships: corruption–imported innovation and corruption–growth. Specifically, we found that corruption exerts a significant effect only for non‐African countries. However, no significant effect was found for the whole sample and African countries. Furthermore, we found that below certain thresholds, corruption significantly decreases the level of growth for both the whole sample and the two subsamples. Above these thresholds, the effect of corruption becomes positive and significant.

Non-linear Threshold Effect of Governance Quality on Economic Growth in African Countries: Evidence from Panel Smooth Transition Regression Approach

Non-linear Threshold Effect of Governance Quality on Economic Growth in African Countries: Evidence from Panel Smooth Transition Regression Approach

Exploring the Effects of Tourism Development on Air Pollution: Evidence from the Panel Smooth Transition Regression Model.

Based on the theoretical framework of the Environmental Kuznets Curve (EKC), this study investigates whether tourism development can decrease air pollution. This study applies the panel smooth transition regression approach and panel data for 2005–2019 from 283 prefecture-level cities in China to examine the nonlinear effect of tourism development on PM2.5, emissions. Our results reveal that the effects of tourism on PM2.5, emissions vary according to the modes of tourist arrivals. At the national level, the effect of tourism on PM2.5 emissions exhibits an inverted-U shape. At the regional level, tourism exerts a U-shaped impact on PM2.5 emissions in eastern China, and tourism is nonlinearly negatively associated with PM2.5 emissions in central and western China. An important theoretical contribution of our study is the proposal and validation of the U-shaped tourism-induced EKC hypothesis.

The capital ratio and the interest rate spread: A panel threshold regression approach

Using annual observations of insured US commercial banks, this paper investigates the possible asymmetric impacts of capital ratios on the interest rate spread where the asymmetry depends on the magnitude and also the channel the bank used to increase the capital ratio. To this end, we employ a panel threshold regression approach with one and two threshold variables, where the change in the capital ratio itself and the main components of change in the capital ratio, namely, change in the capital or change in risk-weighted assets have been used as the threshold variables. The results show a significant threshold effect. In the single threshold models, banks that correspond to regimes with a higher increase in the capital ratio, a higher contribution of capital to the increase in the capital ratio, and a higher contribution of risk-weighted assets to the increase in the capital ratio also show a higher impact of capital ratios on the interest rate spread compared to their counterparts. In the panel threshold regression model with two threshold variables and four regimes, we find similar results. Our baseline results also hold stable using the panel smooth transition regression approach as an alternative modeling approach, using alternative proxies as threshold variables and performing the main tests in different bank size categories.

Correction to: Financial System Development and Democracy: a Panel Smooth Transition Regression Approach for Developing Countries

Correction to: Financial System Development and Democracy: a Panel Smooth Transition Regression Approach for Developing Countries

Panel smooth transition regression approach to analyzing tourism development – housing price nexus in G7 countries

PurposeThe purpose of this study is twofold: first is to examine the nonlinear relationship between tourism development and housing prices, and secondly, the role of economic growth in facilitating the materialization of tourism development and housing prices nexus in G7 countries.Design/methodology/approachThe authors used the newly introduced econometric technique panel smooth transition regression (PSTR) model with two regimes on annual panel data from 1995 to 2018.FindingsResults confirmed that the nexus between the tourism development and housing prices is nonlinear and regime dependent. Moreover, the results showed that the threshold level of economic growth above which tourism development increases the housing prices is 2.63%. The relationship above the threshold value is positive and growth enhancing, while below the threshold, tourism development has a negative effect on housing prices. The economic growth and housing prices also showed the U-shape relationship implying that at a certain level increase in economic growth decreases the housing prices but after a certain level increase in economic growth increases the housing prices.Originality/valueThis paper makes a unique contribution to the literature with reference to developed economies, being a pioneering attempt to investigate the nonlinear relationship between tourism development and housing prices and applying more rigorous and advanced econometric techniques like PSTR.

Financial System Development and Democracy: a Panel Smooth Transition Regression Approach for Developing Countries

Financial System Development and Democracy: a Panel Smooth Transition Regression Approach for Developing Countries

The effect of government expenditure on energy intensity: a panel smooth transition regression (PSTR) approach

The effect of government expenditure on energy intensity: a panel smooth transition regression (PSTR) approach

The effect of government expenditure on energy intensity: a panel smooth transition regression (PSTR) approach

The effect of government expenditure on energy intensity: a panel smooth transition regression (PSTR) approach

Analyzing the economic development-driven ecological deficit in the EU-15 countries: new evidence from PSTR approach.

This paper empirically analyzes the non-linear effect of economic activities on ecological balance indicators that estimate the balance between economies' pressure on nature and the biologically productive resource areas affected by human activity and the earth's ecological carrying capacity. In measuring this balance, ecological balance sheet indicators are divided into four sub-components: cropland, fishing grounds, forest area, and grazing land. The sample of the study consists of the EU-15 countries over the period 1995-2016. To render the study robust with respect to econometric issues such as potential endogeneity bias, cross-country heterogeneity, non-linearity, and time instability, the panel smooth transition regression (PSTR) method is adapted. The empirical findings reveal that up to a certain threshold level, economic activities do not affect the ecological balance as nature can compensate for the resulting externalities, but beyond this threshold, waste accumulation and pollution exceed nature's capacity to absorb. Consequently, these findings do not empirically support the EKC hypothesis with an inverted U-shaped curve and suggest that active environmental policies are needed to improve the environment.

Revisiting natural resources-conflict nexus

This paper analyses the threshold effect of natural resources on internal conflict in 124 countries over the period 1984–2017 using panel smooth transition regression approach. Data used in this study is obtained from International Country Risk Guide and World Development Indicator. The results suggest that the effect of natural resources on internal conflict is non-linear. Moreover, this study highlights the fact that natural resources fueling conflict is far from being conclusive. Nevertheless, the results also indicate that the effect of GDP per capita, ethnic tension and population growth rate on internal conflict change as natural resource increases.

INVESTIGATING THE NEXUS BETWEEN FUEL ETHANOL AND CO2 EMISSIONS. A PANEL SMOOTH TRANSITION REGRESSION APPROACH

In this paper, we fill the gap in the literature by identifying a negative relationship between fuel ethanol consumption and CO2 emissions, building on a sample of 17 European countries covering seven years, from 2010 to 2016. Based on a Panel Smooth Transition Regression approach we show that countries with high levels of income inequality have difficulties in avoiding environmental degradation by promoting policies and regulations for more intense use of biofuels. Furthermore, we bring strong empirical evidence suggesting that biofuels could be an alternative in the future to reducing CO2 emissions. In our opinion, this non-linear analysis could provide the scientific basis for authorities, especially the European Commission to promote environmental policies to a specific country with different levels of carbon emissions rather than to the entire group.