Steady-state Path Research Articles

Convergence patterns in global peace: fresh insights from the club convergence algorithm

ABSTRACT This paper aims to investigate trends in patterns of convergence in global peace. To achieve this goal, we examined the global peace index for 163 countries spanning 2008 to 2023. Employing the club convergence test developed by Phillips and Sul (2007), our findings indicate an absence of a general convergence pattern within the sample. Searching for convergence clubs, we identified six groups of clubs that exhibited convergence towards their steady-state path. The existence of multiple convergence clubs shows the significant differences in global peace across the countries.

Untimely destruction: pestilence, war, and accumulation in the long run

Abstract This paper analyses the effects of disease and war on the accumulation of human and physical capital. We employ an overlapping generation framework in which young adults, motivated by old-age provision and possibly altruism, make decisions about investments in schooling and capital. A poverty trap exists for a wide range of constant war losses and premature adult mortality. If parents are altruistic and the sub-utility function for own consumption is more concave than that for their evaluation of their children’s full income in adulthood, the only possible steady-state growth path involves full education. Otherwise, steady-state paths with incompletely educated children may exist. When mortality and destruction rates are stochastic, the initial boundary conditions and agents’ beliefs have a strong influence on the paths generated by a sequence of shocks. Calibrating the model to Kenya, simulations for stochastic settings yield the finding that a trap exists and is always avoided, but the chances of a slow recovery are substantial.

Evolutionary game model based on cumulative prospect theory for information management mechanism in SIoT

As nodes in Social Internet of Things (SIoT) become more intelligent, malicious information occurs more frequently and spreads more widely. This problem can severely affect the trustworthiness of services and applications in SIoT. Methods to effectively control malicious information spreading in SIoT are essential and necessary. Reputation mechanism provides a powerful tool to tackle this challenge. In this paper, we propose a reputation-based mechanism to activate the self-purification capacity of the SIoT network by balancing information conflicts triggered by reporters and supporters. In order to find the best rewarding and punishment strategy, a bilateral cumulative-prospect-based evolutionary game model of SIoT network information conflict is constructed. Using local stability analysis and numerical simulation, the evolutionary trends of the proposed game model under different theoretical application scenarios are analyzed. The findings indicate that the basic income and deposit of both sides, the popularity of information as well as the importance of the conformity effect all have a significant impact on the system's steady state and evolutionary path. The specific conditions that both participating sides of the game tend to treat conflicts relatively rationally are analyzed. Dynamic evolution analysis and sensitivity analysis of selected parameters show that basic income is positively related to smart object's feedback strategies, while deposit is negatively related to that. While weight of conformity effect or the information popularity goes up, the rising of feedback probability is observed. Based on the above results, suggestions on dynamic reward and punishment strategies are given. The proposed model is a helpful attempt to model the evolution of information spreading in SIoT networks, with the ability to simulate several well-known regularities of message dissemination. Proposed model and suggested quantitative strategies can be helpful to build feasible malicious information control facilities in SIoT networks.

Towards carbon neutrality: A dynamic game approach replacing fossil energy with new marine energy

Based on the dynamic game perspective, this paper establishes a duopoly energy manufacturer substitution game model to explore whether the replacement of traditional fossil energy by marine new energy can reduce carbon emissions and effectively promote carbon neutrality. The results of the study found that the energy output growth rate of new marine energy will increase, and that of traditional fossil energy manufacturers decreases gradually in the game of new marine energy to conventional fossil energy. Research shows that the new marine energy is re-placing the traditional fossil energy, and the total output growth rate of the energy market depends on the technology accumulation and market game effect in this alternative process. Also, it is positive and keeps increasing in the alternative rate of new marine energy to traditional fossil energy. Furthermore, the substitution factor and discount factor positively affect the energy substitution rate. However, the depreciation rate has the opposite effect, and the market scale has no effect on the rate of new marine energy. In the process of marine new energy substitution, there is always a steady-state path that tends to the saddle point equilibrium. The improvement of technology R&D input efficiency is conducive to new energy substitution, reducing the use of fossil energy, and contributing to the realization of carbon neutrality.

Sermaye Birikiminin Fonksiyonel İfadesi ve Solow Uzun-Dönem Büyüme Modelinde Kararlı-Denge Koşulları

This paper proposes a general solution to Solow’s original differential equation explaining the rate of change of capital-labor ratio. Determining the time path of capital-labor ratio, we obtain novel general conditions under which the capital-labor ratio can reach a stable steady-state value. Finally, we apply our findings to the Solow’s CES production function example and we demonstrate that in addition to identification of steady-state conditions, we can obtain exact time period when the economy can reach its stable steady-state capital per labor magnitude. Our results state some policy implications that can be outlined as follows. First, in economies where elasticity of substitution between capital and labor is lower than unity, the economic policies should be different than those implemented in economies where elasticity is greater than unity. Second, the main source of uncertainty in perspective of policy makers is not to determining exactly when the economy activity would reach a stable steady-state path and our findings aim to shed light on this uncertainty.

Educational divergence among urban residents and migrant workers: Evidence from China

While the Harris-Todaro model is a traditional approach used in researching the urban-rural dichotomy, it fails to explain families’ goals to maximize their current utility in terms of intertemporal decision-making conditions. To fill this gap, in this paper, an urban-rural dichotomy model involving labor migration and education is established, in which it is assumed that family utility derives from consumption and children’s educational achievement. The steady-state path derived through the Bellman equation suggests that increasing educational investment and family education intensity leads to a significant urban-rural difference in children’s educational achievement. Compared with the traditional Harris-Todaro model, the transversality condition is loosened in this model, while the unavailability of loans constrains migrant families. Four hypotheses are made and tested using an empirical study. An ordinary least squares regression was used in the analysis, but due to the endogeneity caused by missing variables, the instrumental variable method and two-stage least squares regression were used. The results demonstrate that the household registration system can explain 44.5% of the educational achievement difference, and the initial difference is inflated 4.73 times after nine years of compulsory education. This divergence could increase the differences caused by household registration status, resulting in larger income gaps and intergenerational heredity of identities.

Convergence analysis of ammonia emissions by sector and fuel source in OECD countries from 1750 to 2019 using a new Fourier-centric wavelet approach

Although ammonia emissions are not as huge as carbon and methane emissions, they pose significant threats to ensuring environmental sustainability and productivity. However, the existing literature has paid less attention to the underlying characteristics of ammonia emissions. The chief target of this study is to investigate the stochastic convergence of ammonia emissions at the aggregate level, by sector, and by fuel source in 37 Organization for Economic Cooperation and Development countries for more than two centuries of data. Using a newly proposed Fourier-augmented wavelet unit root test, the empirical findings reveal that the relative ammonia emissions series in most Organization for Economic Cooperation and Development countries follow the unit root process in the aggregate, sectoral, and fuel-specific analyses. Therefore, these findings refer to the existence of divergence, while stochastic convergence does not exist in most cases. Having a divergent pattern of ammonia emissions has several policy implications for policymakers in the context of environmental sustainability. (i) Relative ammonia emission cannot revert to its steady-state path without policy intervention, (ii) policymakers have a chance of affecting the dynamics of ammonia emissions in Organization for Economic Cooperation and Development countries. (iii) As a policy response, the study recommends the pursuant of national environmental policies with consideration to the unique characteristics of the individual countries as the non-existence of convergence of environmental series could result in a diverse level of consciousness of environmental degradation among countries with divergent patterns on emissions levels.

Closer together or further apart? Club convergence in the Organization of Islamic Cooperation (OIC) countries

PurposeThis paper aims to examine the per capita income convergence of 57 member countries of the Organization of Islamic Cooperation (OIC) over the period 1990–2017 and to investigate the determinants of convergence club formations.Design/methodology/approachThe authors applied the methodology of Phillips and Sul (2007, 2009) to identify the convergence clubs and estimated several-ordered logit models to determine the key drivers.FindingsThe results support existence of two convergence clubs and one diverging unit, indicating that 30 and 26 member countries form two separate groups converging to their own steady-state paths. They also suggest a significant productivity divergence between these clubs. The authors showed that the number of convergence clubs started to decline after the global financial crisis in 2008. Moreover, they found that fixed capital formation, education and political stability are key drivers of convergence club membership.Practical implicationsThere is a strong need for large-scale policy interventions to close the gap between leading and lagging clubs of the OIC. A substantial investment in human and physical capital seems necessary for lower-income OIC countries.Originality/valueThis is the first empirical study on the existence of convergence clubs among member countries of the OIC.

The supply of hours worked and fluctuations between growth regimes

Declining hours of work per worker in conjunction with a growing work force may give rise to fluctuations between growth regimes. This is shown in an overlapping generations model with two-period lived individuals endowed with Boppart-Krusell preferences (Boppart and Krusell (2020)). On the supply side, economic growth is due to the expansion of consumption-good varieties through endogenous research. A sufficiently negative equilibrium elasticity of the individual supply of hours worked to an expansion in the set of consumption-good varieties destabilizes the steady state so that equilibrium trajectories may fluctuate between two growth regimes, one with and the other without an active research sector. Fluctuations affect intergenerational welfare, the evolution of GDP, and the functional income distribution. A stabilization policy can shift the economy onto its steady-state path. Fluctuations arise for empirically reasonable parameter constellations. The economics of fluctuations between growth regimes is linked to the intergenerational trade of shares and their pricing in the asset market.

The Supply of Hours Worked and Fluctuations Between Growth Regimes

Declining hours of work per worker in conjunction with a growing work force may give rise to fluctuations between growth regimes. This is shown in an overlapping generations model with two-period lived individuals endowed with Boppart-Krusell preferences (Boppart and Krusell (2020)). On the supply side, economic growth is due to the expansion of consumption-good varieties through endogenous research. A sufficiently negative equilibrium elasticity of the individual supply of hours worked to an expansion in the set of consumption-good varieties destabilizes the steady state so that equilibrium trajectories may fluctuate between two growth regimes, one with and the other without an active research sector. Fluctuations affect intergenerational welfare, the evolution of GDP, and the functional income distribution. A stabilization policy can shift the economy onto its steady-state path. Fluctuations arise for empirically reasonable parameter constellations. The economics of fluctuations between growth regimes is linked to the intergenerational trade of shares and their pricing in the asset market.

Quantitative atmospheric rendering for real-time infrared scene simulation

The radiation transfer of the Earth’s atmosphere is a complex progress, which involves electromagnetic propagation, thermodynamics, and molecular spectroscopy. Atmospheric effects on an infrared scene were presented as transmission, absorption, and scattering. Atmospheric rendering thus aims to visually display these effects of the radiation through the Earth’s atmosphere. In this paper, a quantitative atmospheric rendering method was proposed for real-time infrared scene simulation. By counting the selective absorption of water, carbon dioxide, and ozone on an infrared spectrum, transmittance was calculated using Lambert–Beer’s law, the steady-state path radiation was precomputed according to Kirchhoff’s law, and the Rayleigh and Mie scattering effects were calculated with GPU when an infrared scene was rendered in real-time. Simulations were conducted to verify the performance of the proposed method by comparing our results with those obtained from the MODTRAN program.

Investment Expenditure Nexus Economic Growth in Ethiopia: Cointegration Approach

The major objective of this study was to investigate the nexus between investment expenditure and economic growth in Ethiopia. The study adopted modified neoclassical growth framework using a data from NBE and WB data base from 1975-2018. All the variables were found non stationary at level and become stationary at first difference, so that Johansen’s co-integration test was conducted to check for long run relationship among variables in the model. Subsequently, all the variables confirmed co-integartion and VEC model was estimated to show both short run and long run relationships and finally Granger causality test was applied to recognize the direction of causation. The findings of the study revealed that investment expenditure have insignificant short run impact on growth, however significantly positive in long run. The result from causality exhibited bidirectional relationship. Besides, labor force, openness, exchange rates and liberalization dummy incorporated in the model were found positive and significant in the long run. Further, the coefficient of ECT was -0.4010 that shows any deviations from long run equilibrium is corrected at 40.10% annually and converges towards its long run steady state path. Based on the findings, it is recommended that a long run policy towards investment expenditure in home economy is whispered to deliver a significant effect on economic growth. Hence, increasing efficiency of investment sector would enable Ethiopia to sustain domestic economic growth in long run. Keywords : Investment expenditure, Granger, Co-integration, Economic Growth, long run, Ethiopia. DOI: 10.7176/JESD/11-11-04 Publication date: June 30th 2020

A dynamic model of quality assurance in primary healthcare in developing countries

ABSTRACT Purpose: This study aims to examine the impact of investments in Quality Assurance (QA) within the primary healthcare industry in developing countries using a dynamic economic model. Study design: The study deviates from a static framework to examine the case where healthcare quality is a dynamic stock, which increases over time due to investments in quality assurance by healthcare providers and deteriorates due to resources being overused or becoming obsolete. Dynamic optimization is used to examine the behaviour of a representative primary healthcare (PHC) provider and the implications for other healthcare providers in the field. Findings: The study supports the argument for long term benefits of quality assurance investments. At least two stable steady state paths were revealed. In one case, healthcare providers experience a period of decreasing healthcare quality and the need for increased investment in quality assurance. This is typical of the healthcare industry in many developing countries where the focus has been on amassing production inputs. The second path is characterized by increasing healthcare quality over time without the need for additional investment in quality assurance as the healthcare providers enjoy sustained returns on their initial investment in quality assurance. Implications: Policymakers are advised to monitor their current level of healthcare quality provided to their clients. They should be proactive in their approach to elevating the quality of healthcare. Once the focus changes from that of stockpiling healthcare inputs to one of investment in quality assurance, not only will the quality of healthcare improve, but it will be sustainable as the healthcare industry will reap the lasting returns on their investment in quality assurance.

Relationship between Volatility of Economics Variables and Economics Growth

Economic growth of an economy is defined as the steady state path through which the productivity of an economy is improved and increases the levels of national output and income. The government consumption expenditures and investment play a key role in the process of investigating the macroeconomic performance of an economy and determinants of economic growth. The countries which grow quickly, invest a substantial fraction of their GDP for consumption expenditures as well for the sources which encourage private investment. The objective of this study to calculate the volatility in economics growth in Pakistan. The annual time series data are used from 1975 to 2014 from WDI, Economics survey of Pakistan and Hand Book of Statistics. GARCH model has been used to measure volatility of all variables. The empirical results of the study confirmed that the volatility of the different variables (volatility of inflation, volatility of interest rate, volatility of political instability, volatility of GDP, and volatility of foreign direct investment) significant affect the government consumption expenditures and private investment in the economy of Pakistan. The study analyzed data by using the autoregressive distributive lag model which is mainly used in time series data Econometrics to estimate the non-stationary models with mix order of integration. The estimated results of the study evaluated that volatility of the inflation lead to uncertainty which is also suggested by the Able (1980) and negatively affect the economy consumption expenditures as well as private investment in the economy of Pakistan. Because uncertainty directly affects the cost of capital as well as reduce private investor confidence.

Are poor provinces catching‐up the rich provinces in Indonesia?

AbstractThis paper examines the dynamics of socio‐economic inequalities in Indonesia over the last four decades. We apply a club convergence test to provincial panel data on four socio‐economic indicators: per capita gross regional product, the Gini coefficient, the school enrolment rate, and the fertility rate. We find that there is no single equilibrium steady state path for all these indicators in Indonesia. Instead, the data suggest that there exist two groups, with provinces converging within each of these two groups, but not between these groups. Finally, we identify the provinces that are catching‐up and those that are falling behind in terms of the various socio‐economic indicators.

A Panel Analysis of Polish Regional Cities Residential Price Convergence in the Primary Market

We employ two methodologies in order to identify groupings of cities and to analyse the factors which drive convergence in residential prices across Polish prime markets over the period 2007-2018. The Phillips and Sul (2007) methodology is first used to identify convergence in primary residential prices in the major Polish cities. The results indicate that residential prices do not converge to a single common trend. However, we find the existence of three distinct sub-groups of cities (‘clubs’), where residential prices converge to each club’s steady-state path. Using an ordered logit model, we investigate supply and demand factors determining club membership, the model allocating 13 out of the 15 cities as belonging to the clubs identified by the Phillips and Sul procedure.

Untimely Destruction: Pestilence, War and Accumulation in the Long Run

This paper analyses the effects of disease and war on the accumulation of human and physical capital. We employ an overlapping-generations frame-work in which young adults, confronted with such hazards and motivated by old-age provision and altruism, make decisions about investments in schooling and reproducible capital. A poverty trap exists for a wide range of stationary war losses and premature adult mortality. If parents are altruistic and their sub-utility function for own consumption is more concave than that for the children's human capital, the only possible steady-state growth path involves full education. Otherwise, steady-state paths with incompletely educated children may exist, some of them stationary ones. We also examine, analytically and with numerical examples, a growing economy's robustness in a stochastic environment. The initial boundary conditions have a strong influence on outcomes in response to a limited sequence of destructive shocks.

Servicization with skill premium in the digital economy

PurposeThe purpose of this paper is to examine an endogenous growth model, as a component of a broader study of servicization with skill premium and its policy implications in the evolving digital economy.Design/methodology/approachThis paper develops a two-sector endogenous growth model which allows for the observed characteristics of digitally empowered structural changes. Specifically, the driving force of economic growth is the expanding variety of intermediate services as a consequence of innovation in services. The introduction of new intermediate services specifically contributes to total factor productivity in the production of service sector, and thus an uneven growth path with skill premium toward a service economy generally exists.FindingsThe principal finding of this paper is that the digitally empowered expanding variety of intermediate services due to innovation contributes significantly to total factor productivity in the production of service sector, and thus a servicization with skill premium generally exists along a steady-state path. In addition, this paper derives an optimal innovation policy to rule out the market failures due to innovation externality and market power in monopolistic competition conditions, and shows the Rybczynski effects of exogenous endowment changes in the evolving digital economy.Originality/valueThe principal contribution of this paper is to determine how unbalanced endogenous growth along a steady-state path is linked with a service economy with skill premium in the evolving digital economy. In addition to this analysis, this paper provides policy implications – namely, that a positive but finite innovation subsidy can achieve the social optimum in the digital economy, and that an exogenous increase in high-skilled labor can speed up a digitally empowered economic growth.

Convergence clubs in Latin America

ABSTRACTThe aim of this work is to identify convergence clubs in 17 Latin American countries in terms of GDP per capita during the period 1990–2014. To do this, we apply the methodology developed by Phillips-Sul in order to identify the different convergence clubs on the path of growth in the Latin American economy over this period. The empirical results strongly support the existence of convergence clubs, indicating that the Latin American economy consists of four groups, each converging towards its own steady-state path, with two countries being divergent.

Synergetic approach to study forming path stability of the end cutdown milling by side faces (case of high speed cutting)

The work objective is to consider the stability problem of steady-state paths of the elastic deformational tool displacement under the longitudinal end milling. The authors analyze the case of high speed cutting in contrast to the previously discussed stability problems that analyze the case of slow movements for which the system parameters can be considered frozen in the equations in variations relative to the stationary path. In this case, the stability analysis must consider the linearized system in variations with periodically varying coefficients. With speeding-up the tool rotation in many cases there is a parametric self-excitation of oscillations. Therefore, the main attention is paid to studying the parametric excitation conditions of a dynamic endmilling system. It is shown that the parametric excitation condition is affected by the technological cutting modes, both the tool rotation frequency and the tool geometry which determines the matrix angular coefficients of the cutting forces orientation. Examples of stability areas depending on changes in the system settings are given.