Unidirectional Linkage Research Articles

The Relationship Between Education Inequality, Poverty, and Economic Growth

This study aims to establish the relationship between education inequality, poverty, and economic growth in the 10 Provinces of Sumatra Island 2004-2022. The data used is secondary data sourced from the Badan Pusat Statistik (BPS). The analytical approach employed encompasses the Panel Vector Error Correction Model (PVECM) along with Granger Causality. The findings indicate the presence of both short-term and long-term associations between education inequality and economic growth concerning poverty levels in the 10 Provinces of Sumatra Island. Furthermore, a bidirectional connection is observed between education inequality and economic growth within the 10 Provinces of Sumatera Island. Conversely, a unidirectional linkage is identified between economic growth and poverty in the 10 Province of Sumatera Island. It is anticipated that governmental policies will aim to enhance educational aspects and promote public consciousness regarding education to bolster developmental investments across various regional autonomies at both the Regency/City and Province tiers in Indonesia.

Clarifying the nexus between Trade Policy Uncertainty, Economic Policy Uncertainty, FDI and Renewable Energy Demand

: As the world becomes increasingly aware of the need to shift towards sustainable energy sources, China and the United States are two global superpowers leading this transition. With growing populations and increasing demand for energy, these countries have recognized the importance of renewable energy in meeting their needs while reducing carbon emissions. The motivation of the study is to evaluate the impact of trade policy uncertainty on renewal energy demean in the USA and China for the period 2000-2021 by employing linear and nonlinear assessment. The test statistics derived through the cointegration test by following Bayer-Hancked and Makki's cointegration established a long-run tie in the empirical equation. Moreover, the long-run linkage was revealed with symmetry and asymmetry investigation. Referring to the coefficients of linear assessment, the study established that uncertainties have a detrimental role in clean energy demand in the long- and short-run assessment. The asymmetric association between uncertainties and REC has been documented through the execution of a standard weld test with the null of symmetry. The directional causality test established a unidirectional linkage between trade policy uncertainty and REC [TPU<- ->REC], and a bidirectional linkage between economic policy uncertainty and REC [EPU<- ->REC].

Role of financial markets and natural resource utilization in green economic recovery: Evidence from selected developing economies

Green recovery, as a key economic recuperation procedure, is viewed as an ultra-fine choice for economies as it seems to be the only passage through which nations can rebuild their economies. The study, thus, assesses the role of financial markets and natural resource utilization in green economic recovery in 20 developing nations, with full years of information from 1995 to 2020. The major findings confirm that natural resource utilization accelerates green economic recovery. Also, the uni-directional linkage of natural resource utilization and green economic recovery is confirmed, hence, enhancing the significance of resource utilization. The predicted findings also show that the financial markets and price fluctuations of land and resources are more sensitive than manufacturing capacity. The consistent waveform demonstrates the unidirectional cause-and-effect relationship between worldwide financial strategy's volatility, supply prices, and manufacturing output. Based on the findings, the study recommends that key natural resources policies are helpful to cover green economic recovery.

Revisiting the finance-growth nexus in Hong Kong: fresh insights from nonparametric analysis

PurposeSince financial sector plays a critical economic role in Hong Kong, the current research aims to comprehensively analyze the association between financial development and economic growth in the country to draw correct conclusions about the impact that financial sector's development has on the growth of the economy. This requires both using of more comprehensive data that includes all or nearly all elements of the country's financial sector and utilizing advanced econometrics techniques to provide more reliable evidence based on the findings. In the study, both issues have been addressed more academically to aid the relevant authorities better.Design/methodology/approachThis study empirically examines the financial development-economic growth nexus in Hong Kong employing data covering 1980–2019. The quantile-on-quantile (QQ) approach of Sim and Zhou (2015) is utilized to investigate certain subtle aspects of the association linking financial development and economic growth. In addition, the authors benefit from applying the nonlinear Granger causality test of Diks and Panchenko (2006) to assess the variables' nexus in a nonlinear manner.FindingsIn contrast to the evidence of a unidirectional linkage documented in many related studies, the empirical findings suggest that a bi-directional relationship exists between financial development and economic growth for Hong Kong. This is a helpful input for the relevant policymakers and implies that they can set appropriate policies and regulations to balance financial development and economic growth in this country.Originality/valueThe originality of this study can be divided into two parts. Methodologically, unlike past studies that utilized mostly linear and parametric methods, the paper contributes to the literature by applying the more robust nonparametric and nonlinear methodologies. Theoretically, most researchers have used various financial development indicators, which led to very different conclusions. Therefore, this study attempts to resolve this deficiency in the literature by using a more comprehensive index for financial development.

Relative Performance of Business and Consumer Economic Expectations Across EU Countries

Survey designs that aim at international comparisons of economic expectations are complex. Question wording and response scales must be applicable across countries to provide policy makers with reliable information. Substantial progress on harmonization has been made by the EU in their member surveys. While forming expectations is a difficult task for anyone, business firms have been thought to have a distinct advantage over consumers. This paper investigates this presumed superiority by examining whether firms change their expectations in advance of households, and whether firms’ expectations provide more accurate forecasts than household expectations. The comparisons are based on monthly expectations data for the countries in the European Union. While linkages were often found to be bidirectional, the data more frequently found unidirectional linkages that went from households to firms for unemployment and GDP. For a modest number of countries, firms and households jointly contributed to forecast accuracy, but the sole impact of household data clearly dominated the comparable results for firms. The objective of this analysis was exploratory, with the goal to identify countries which lacked significant connections for a more detailed investigation of the potential sources of measurement errors.

Nexus between Savings, Investment and Economic Growth in Nepal (1975-2020): Evidence from ARDL Bounds Testing Approach

Background: There are different sources of economic growth, including domestic savings for capital formation. Domestic savings mobilized into the expansion of productive capacity of an economy adds economic growth and thereby reinforces investment and savings. Gross savings and capital formation matter for the economic growth of Nepal.
 Objective: The study's main objective is to inspect the nexus between gross domestic saving, gross capital formation, and economic growth in Nepal.
 Methodology: This study uses the Auto-Regressive Distributive Lag (ARDL) approach to cointegration. Zivot-Andrews (ZA) unit root test has been used to check for a structural break in data, and the Bounds test has been carried out to explore the existence of a long-run association between variables.
 Results: The empirical outcomes pointed out a positive and significant long-run relationship between gross domestic savings, gross capital formation, and economic growth in Nepal. Zivot-Andrews unit root tests reveal a structural break in the data set. Causality result indicates a unidirectional linkage from gross investment to growth, economic growth to gross domestic saving, and a bidirectional linkage between gross domestic savings and gross investment.
 Conclusion: The study concludes that an increase in the productive capability through increased saving and investment in the productive sector helps increase the economic growth in Nepal. So, gross domestic savings, gross investment, and economic growth are associated in the long run with one structural break.
 Implications: The study implies that real economic growth in Nepal can be enlarged if the government of Nepal focuses on an increase in saving and make strong provisions for mobilizing and investing such savings into productive sectors of the economy.
 Originality: This paper is original and has not been published in other publications. Similarly, no financial support has been received while working on this paper.
 Paper Type: Research paper

Factors influencing CO2 emissions in the MENA countries: the roles of renewable and non-renewable energy.

This article seeks to examine the impacts of renewable and non-renewable energy on carbon dioxide emissions for 14 Middle East and North Africa economies using fully modified least-squares and vector error correction model techniques. Different sectoral outputs (agricultural, industry, and services) are considered in the analysis to find the influence of each sector on carbon emissions and to validate the environmental Kuznets curve model at both aggregate and disaggregate levels. The fully modified least-squares estimates show that renewable energy enhances environmental quality, whereas non-renewable energy deteriorates it. We also find that the industry sector has the highest contribution to environmental degradation. The results of the vector error correction model technique show a two-way linkage between CO2 emissions and renewable energy and between CO2 emissions and non-renewable energy in both short and long runs. At the sectoral level, we also find a two-way linkage between agricultural value added and CO2 emissions, a unidirectional relationship running from emissions to industry value added, and a unidirectional linkage running from services value added to CO2 emissions in both short and long runs. Therefore, governments must focus their actions on environmental policies of a green and inclusive economy that combine tools of environmental economics with those of the ecological economy. This can be considered a call for policymakers to take relevant and quick policies and actions towards low-carbon energy to reach these dual objectives.

Ecofeminism and Natural Resource Management: Justice Delayed, Justice Denied

Women have a right to excel in all spheres of activity. However, their roles are mainly confined in the resource extraction industry due to masculinity bias. African women are considered exemplary cases where women have low access to finance and economic opportunities to progress in the natural resource industry. This study examines the role of women’s autonomy in mineral resource extraction by controlling ecological footprints, financial development, environmental degradation, economic growth, and changes in the general price level in the Democratic Republic of the Congo data from 1975–2019. The autoregressive distributed lag estimates show that in the short-run, women’s autonomy decreases mineral resource rents; however, this result disappears in the long-run and the positive role of women’s autonomy in increasing resource capital is confirmed. Ecological footprints are in jeopardy from saving mineral resources both in the short- and long-term. Financial development negatively impacts mineral resource rents, while women’s access to finance supports the mineral resource agenda. The positive role of women in environmental protection has led to increased mineral resource rents in the short- and long-term. Women’s social and economic autonomy increases mineral resource rents in the short-term, while it has evaporated in the long-term. The Granger causality has confirmed the unidirectional linkages running from women’s green ecological footprints, access to finance, and women participating in environmental protection to mineral resource rents in a country. The variance decomposition analysis has shown that women’s economic autonomy and access to finance will exert more significant variance shocks to mineral resource rents over the next ten years’ period. The results conclude the positive role of women’s freedom in the mineral resource sustainability agenda. Thus, there is a high need to authorize women through access to finance and economic decisions to restore natural resource capital nationwide.

How do climatic change, cereal crops and livestock production interact with carbon emissions? Updated evidence from China.

Carbon dioxide emission and climatic variation have a detrimental influence on the atmosphere as well as on agriculture production. The key aim of the present study was to investigate the influence of carbon dioxide emission on livestock, cereal crops production, rainfall and temperature in China by utilizing the vector autoregressive model and Granger causality test for the period 1988-2017. Variables stationarity was verified by using ADF, P-P and KPSS unit root tests. The outcomes through long-run dynamics exposed that agriculture value added and rainfall have a positive influence on carbon dioxide emission, while cereal crops production, livestock production and temperature have an adverse interaction with carbon dioxide emission. Similarly, the results of the short-run analysis also demonstrate that agriculture value added, cereal crops production, livestock production, rainfall and temperature have a significant influence on carbon dioxide emission with their p-values (0.0488), (0.0885), (0.0263), (0.0096) and (0.5141) respectively. Furthermore, the Granger causality test outcomes also exposed a unidirectional linkage amid the variables. In order to improve agricultural productivity, the Chinese government should take potential steps to minimize the carbon dioxide emission from various industries that trigger climate change.

Oil shocks and stock volatility: new evidence via a Bayesian, graph-based VAR approach

ABSTRACTThis article examines the temporal dependence between three oil shocks and realized volatility in the stock markets of G20 countries between 1994 and 2019. By applying a novel, graphical, Bayesian VAR (BGVAR) model, we calculate unidirectional linkages of oil and stock volatility with a full and segmented sample. The results suggest an overall causality from stock volatility to oil shocks. For certain short, specific periods, the causal direction reverses. Depending on the country and the source of an oil shock, the magnitude and type of the effect can vary considerably. Specific oil-market shocks occur most often in our full sample. In a time-varying structure, oil supply shocks’ impact on stock volatility is more prominent, and net oil-importing countries’ responses to these shocks are greater than for oil-exporting countries. In addition, we find that relationship dynamics can capture market information, such as global economic growth during the 2008–2009 financial crisis.

Investor behavior and weather factors: evidences from Asian region

The behavioral finance studies generally analyse the relationship between investor moods, caused by weather factors and indices returns via investor moods. The present study examines the relationship between three weather factors (temperature, humidity, and wind speed) in capital cities (namely Beijing for China, Tokyo for Japan, Victoria City for Hong Kong, New Delhi for India and Singapore for Singapore), and sample stock indices (Shanghai Stock Exchange from China, Nikkei 225 from Japan, Hang Seng Index from Hong Kong, BSE Sensex from India and Singapore Exchange Limited from Singapore) of selected Asian countries. This study applied statistical tools like Descriptive Statistics, ADF Test, VAR Module and adopted the Granger Causality Approach. The found that among the three weather variables, temperature recorded a statistically significant influence on the returns of Shanghai Stock Exchange (Unidirectional Linkage), HANG SENG Index (Unidirectional Linkage) and also BSE Sensex (Bi-Directional Linkage). Wind speed recorded Bi-Directional Linkages with HANG SENG Index. The findings of this study could help the investors in making better investment management decisions. It is found that there are valuable opportunities to international investors for diversifying their stocks. The study does contribute to the behavioral finance literature.

Is trade openness good for environment in South Korea? The role of non-fossil electricity consumption.

The paper investigates the linkage of carbon dioxide (CO2) emissions, per capita real output, share of non-fossil electricity consumption, and trade openness in South Korea from 1971 to 2013. The empirical results indicate that the environmental Kuznets curve (EKC) is supported by autoregressive distributed lag (ARDL) test. Both short- and long-run estimates indicate that increasing non-fossil electricity consumption can mitigate environmental degradation, and increasing trade aggravates carbon dioxide emissions. By Granger causality, long-run causalities are found in both equations of CO2 emissions and trade openness, as well as exports and imports. In the short-run, evidence indicates feedback linkage between output and trade, unidirectional linkages from trade to emissions, from emissions to output, and from output to non-fossil electricity use. Therefore, South Korea should strengthen the sustainable economy, consume clean energy, and develop green trade.

Does trade openness affect CO2 emissions: evidence from ten newly industrialized countries?

This paper examines whether the hypothetical environmental Kuznet curve (EKC) exists or not and investigates how trade openness affects CO2 emissions, together with real GDP and total primary energy consumption. The study sample comprises ten newly industrialized countries (NICs-10) from 1971 to 2013. The results support the existence of hypothetical EKC and indicate that trade openness negatively and significantly affects emissions, while real GDP and energy do positive effects of emissions. Moreover, the empirical results of short-run causalities indicate feedback hypothetical linkage of real GDP and trade, unidirectional linkages from energy to emissions, and from trade to energy. The error correction terms (ECTs) reveal in the long run, feedback linkages of emissions, real GDP, and trade openness, while energy Granger causes emissions, real GDP, and trade, respectively. The study recommendations are that our policymakers should encourage and expand the trade openness in these countries, not only to restrain CO2 emissions but also to boost their growth.

Bayesian Graphical Models for STructural Vector Autoregressive Processes

SummaryThis paper proposes a Bayesian, graph‐based approach to identification in vector autoregressive (VAR) models. In our Bayesian graphical VAR (BGVAR) model, the contemporaneous and temporal causal structures of the structural VAR model are represented by two different graphs. We also provide an efficient Markov chain Monte Carlo algorithm to estimate jointly the two causal structures and the parameters of the reduced‐form VAR model. The BGVAR approach is shown to be quite effective in dealing with model identification and selection in multivariate time series of moderate dimension, as those considered in the economic literature. In the macroeconomic application the BGVAR identifies the relevant structural relationships among 20 US economic variables, thus providing a useful tool for policy analysis. The financial application contributes to the recent econometric literature on financial interconnectedness. The BGVAR approach provides evidence of a strong unidirectional linkage from financial to non‐financial super‐sectors during the 2007–2009 financial crisis and a strong bidirectional linkage between the two sectors during the 2010–2013 European sovereign debt crisis. Copyright © 2015 John Wiley & Sons, Ltd.

Bayesian Graphical Models for Structural Vector Autoregressive Processes

This paper proposes a Bayesian, graph-based approach to identification in vector autoregressive (VAR) models. In our Bayesian graphical VAR (BGVAR) model, the contemporaneous and temporal causal structures of the structural VAR model are represented by two different graphs. We also provide an efficient Markov chain Monte Carlo algorithm to estimate jointly the two causal structures and the parameters of the reduced-form VAR model. The BGVAR approach is shown to be quite effective in dealing with model identification and selection in multivariate time series of moderate dimension, as those considered in the economic literature. In the macroeconomic application the BGVAR identifies the relevant structural relationships among 20 US economic variables, thus providing a useful tool for policy analysis. The financial application contributes to the recent econometric literature on financial interconnectedness. The BGVAR approach provides evidence of a strong unidirectional linkage from financial to non-financial super-sectors during the 2007-2009 financial crisis and a strong bidirectional linkage between the two sectors during the 2010-2013 European sovereign debt crisis.

Spatial externalities and the common-pool resource mechanism

This paper expands the common-pool resource (CPR) game of Walker et al. (1990) to incorporate spatial structure with two spatially linked common-pool resources. Subjects participated in a five-player common-pool resource game under three alternative spatial structures (non-spatial, bi-directional and uni-directional linkages) within the experiment. Results indicate that behavior in the uni-directional CPR game yielded the highest average yields, whereas those in the bi-directional game were lower than in the non-spatial game. Furthermore, investment patterns in the uni-directional game were proportionally lower in the “sink” CPR than those in the “source” CPR. This behavior is consistent with the individual incentives of the game and highlights the importance of understanding the spatial structure present within our natural resources.