We start by clarifying the role of the interest rate-growth rate differential for long-term fiscal sustainability with numerical examples for the Greek economy. In turn, building upon this popular approach, which is based on the intertemporal government budget constraint only, we make a number of methodological points that question the quantitative usefulness of standard calculations. Among other things, we argue that a structural approach is needed and this reveals the necessity of fiscal rules according to which fiscal instruments systematically react to public debt imbalances. This naturally enables us to evaluate the EU’s fiscal rules and to suggest simple and implementable alternatives. Throughout, we confront our arguments with data from the Euro Area.
{"title":"From debt arithmetic to fiscal sustainability and fiscal rules: Taking stock and policy lessons","authors":"George Economides , Giota Koliousi , Natasha Miaouli , Apostolis Philippopoulos","doi":"10.1016/j.jeca.2024.e00393","DOIUrl":"10.1016/j.jeca.2024.e00393","url":null,"abstract":"<div><div>We start by clarifying the role of the interest rate-growth rate differential for long-term fiscal sustainability with numerical examples for the Greek economy. In turn, building upon this popular approach, which is based on the intertemporal government budget constraint only, we make a number of methodological points that question the quantitative usefulness of standard calculations. Among other things, we argue that a structural approach is needed and this reveals the necessity of fiscal rules according to which fiscal instruments systematically react to public debt imbalances. This naturally enables us to evaluate the EU’s fiscal rules and to suggest simple and implementable alternatives. Throughout, we confront our arguments with data from the Euro Area.</div></div>","PeriodicalId":38259,"journal":{"name":"Journal of Economic Asymmetries","volume":"31 ","pages":"Article e00393"},"PeriodicalIF":0.0,"publicationDate":"2024-11-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142743938","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-01DOI: 10.1016/j.jeca.2024.e00388
Spyridon Boikos , Alberto Bucci
Leisure generates externalities for the economy as a whole, as individuals generally get some (dis-)utility from their leisure-time. However, the sign and the extent of the effect that these externalities have on a specific worker's productivity and on the productivity of all other factors used in combination with labor (hence on long-term economic growth) may be asymmetric across different economic activities. The objective of this paper is to shed light on the impact that sector-specific leisure-time externalities have on the innovation rate, on the sectorial allocation of (skilled) labor, and eventually on the long-run economic growth rate, without making any prior assumption on their sign and magnitude. In the baseline model the growth rate of per capita income moves together with all types of leisure externalities, whereas the innovation rate moves together with (and depends solely on) the R&D-sector-specific leisure externality. From numerical analyses, we conclude that sector-specific leisure-time externalities provide asymmetric effects on the growth rate of real per capita GDP and on the way skilled labor is allocated across different economic activities. The robustness of these conclusions is analyzed by using various definitions of leisure along with different utility functions (including leisure as an argument).
闲暇会给整个经济带来外部效应，因为个人通常会从闲暇时间中获得一些（非）效用。然而，在不同的经济活动中，这些外部性对特定工人的生产率以及与劳动力结合使用的所有其他要素的生产率（从而对长期经济增长）的影响的符号和程度可能是不对称的。本文旨在揭示特定部门闲暇时间外部性对创新率、（熟练）劳动力的部门分配以及最终对长期经济增长率的影响，而不对其符号和大小做任何预先假设。在基线模型中，人均收入增长率与所有类型的闲暇外部性一起变动，而创新率则与研发部门特有的闲暇外部性一起变动（并且只取决于这种外部性）。通过数值分析，我们得出结论：特定部门的闲暇外部性对实际人均 GDP 增长率和熟练劳动力在不同经济活动中的分配方式产生了不对称的影响。通过使用不同的闲暇定义和不同的效用函数（包括作为参数的闲暇），我们分析了这些结论的稳健性。
{"title":"The asymmetric impact of leisure externalities on economic growth","authors":"Spyridon Boikos , Alberto Bucci","doi":"10.1016/j.jeca.2024.e00388","DOIUrl":"10.1016/j.jeca.2024.e00388","url":null,"abstract":"<div><div>Leisure generates externalities for the economy as a whole, as individuals generally get some (dis-)utility from their leisure-time. However, the sign and the extent of the effect that these externalities have on a specific worker's productivity and on the productivity of all other factors used in combination with labor (hence on long-term economic growth) may be asymmetric across different economic activities. The objective of this paper is to shed light on the impact that sector-specific leisure-time externalities have on the innovation rate, on the sectorial allocation of (skilled) labor, and eventually on the long-run economic growth rate, without making any prior assumption on their sign and magnitude. In the baseline model the growth rate of per capita income moves together with all types of leisure externalities, whereas the innovation rate moves together with (and depends solely on) the R&D-sector-specific leisure externality. From numerical analyses, we conclude that sector-specific leisure-time externalities provide asymmetric effects on the growth rate of real per capita GDP and on the way skilled labor is allocated across different economic activities. The robustness of these conclusions is analyzed by using various definitions of leisure along with different utility functions (including leisure as an argument).</div></div>","PeriodicalId":38259,"journal":{"name":"Journal of Economic Asymmetries","volume":"30 ","pages":"Article e00388"},"PeriodicalIF":0.0,"publicationDate":"2024-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142554543","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-01DOI: 10.1016/j.jeca.2024.e00365
Costas Siriopoulos, Dionisis Philippas
{"title":"Special issue: Asymmetries in the global economy","authors":"Costas Siriopoulos, Dionisis Philippas","doi":"10.1016/j.jeca.2024.e00365","DOIUrl":"10.1016/j.jeca.2024.e00365","url":null,"abstract":"","PeriodicalId":38259,"journal":{"name":"Journal of Economic Asymmetries","volume":"30 ","pages":"Article e00365"},"PeriodicalIF":0.0,"publicationDate":"2024-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142704433","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-01DOI: 10.1016/j.jeca.2024.e00390
Ibrahim Lanre Ridwan , Abdul Rahman Bin S. Senathirajah , Mamdouh Abdulaziz Saleh Al-Faryan
One of the key goals of the United Nations Sustainable Goals focuses on nations pursuing sustainable growth (SDG-2) and notable strands of studies have emphasized the fundamental roles financial development plays in its attainment. However, there is limited understanding regarding how financial development influences trade performance and competitive advantage. Consequently, this study aims to provide the first empirical evidence of the asymmetric effects of financial development on trade performance in Africa from 1996 to 2022. Additionally, the empirical model that controls for market size, transport services, and digitalization is evaluated through various methodologies, including Mean Group (MG), Pooled Mean Group (PMG), Dynamic Fixed Effects (DFE), and Quantile Regression (QR). The results indicate that while negative shocks adversely affect trade performance, positive shocks stemming from financial development enhance it. Moreover, trade performance is positively influenced by digitalization, market size, and trade openness, whereas it is negatively affected by transportation services. These findings carry important implications for policy-making.
{"title":"Investigating the asymmetric effects of financial development on trade performance in Africa: Can digitalization, transport services, and regulatory quality drive the vision 2063?","authors":"Ibrahim Lanre Ridwan , Abdul Rahman Bin S. Senathirajah , Mamdouh Abdulaziz Saleh Al-Faryan","doi":"10.1016/j.jeca.2024.e00390","DOIUrl":"10.1016/j.jeca.2024.e00390","url":null,"abstract":"<div><div>One of the key goals of the United Nations Sustainable Goals focuses on nations pursuing sustainable growth (SDG-2) and notable strands of studies have emphasized the fundamental roles financial development plays in its attainment. However, there is limited understanding regarding how financial development influences trade performance and competitive advantage. Consequently, this study aims to provide the first empirical evidence of the asymmetric effects of financial development on trade performance in Africa from 1996 to 2022. Additionally, the empirical model that controls for market size, transport services, and digitalization is evaluated through various methodologies, including Mean Group (MG), Pooled Mean Group (PMG), Dynamic Fixed Effects (DFE), and Quantile Regression (QR). The results indicate that while negative shocks adversely affect trade performance, positive shocks stemming from financial development enhance it. Moreover, trade performance is positively influenced by digitalization, market size, and trade openness, whereas it is negatively affected by transportation services. These findings carry important implications for policy-making.</div></div>","PeriodicalId":38259,"journal":{"name":"Journal of Economic Asymmetries","volume":"30 ","pages":"Article e00390"},"PeriodicalIF":0.0,"publicationDate":"2024-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142656233","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-11-01DOI: 10.1016/j.jeca.2024.e00389
Hercules Haralambides , Iman Bastanifar , Kashif Hasan Khan , Zahra Shahryari
We introduce a new concept of distance, and the way this could affect gravity-based trade modeling. Our motivation is twofold: a) global uncertainty in trade relations allows us to treat distance as an asymmetric shock in economic modeling; b) economies of scale in seaborne trade make geographical distance less relevant in trade models, substituted by economic distance, as this can be proxied by ocean freight rates. This, for instance, allows China to import iron ore from Brazil, at three times the distance compared to Australia. We enhance the New Keynesian Dynamic Stochastic General Equilibrium Model (DSGE) by incorporating a distance shock parameter into the transaction costs function. We test this on Iran's participation in the Shanghai Cooperation Organization as well as in the International North-South Transport Corridor. We conclude that longer physical distances do not necessarily have a negative impact on trade.
{"title":"Asymmetric distance and business cycles (ΑDBC): A new understanding of distance in international trade models through the example of Iran's trade corridors","authors":"Hercules Haralambides , Iman Bastanifar , Kashif Hasan Khan , Zahra Shahryari","doi":"10.1016/j.jeca.2024.e00389","DOIUrl":"10.1016/j.jeca.2024.e00389","url":null,"abstract":"<div><div>We introduce a new concept of distance, and the way this could affect gravity-based trade modeling. Our motivation is twofold: a) global uncertainty in trade relations allows us to treat distance as an asymmetric shock in economic modeling; b) economies of scale in seaborne trade make geographical distance less relevant in trade models, substituted by economic distance, as this can be proxied by ocean freight rates. This, for instance, allows China to import iron ore from Brazil, at three times the distance compared to Australia. We enhance the New Keynesian Dynamic Stochastic General Equilibrium Model (DSGE) by incorporating a distance shock parameter into the transaction costs function. We test this on Iran's participation in the Shanghai Cooperation Organization as well as in the International North-South Transport Corridor. We conclude that longer physical distances do not necessarily have a negative impact on trade.</div></div>","PeriodicalId":38259,"journal":{"name":"Journal of Economic Asymmetries","volume":"30 ","pages":"Article e00389"},"PeriodicalIF":0.0,"publicationDate":"2024-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142554542","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-28DOI: 10.1016/j.jeca.2024.e00387
Panos Fousekis
The objective of the paper is to assess the contemporaneous and temporal links between the relative beef prices and the composition of beef supply (slaughters) in the UK, using weekly data and wavelet cross-correlation analysis. For female bovine animals (heifers and adult cows) and for most of the frequencies considered, the price ratio has a negative contemporaneous association with the supply ratio while for male bovine animals (steers and young bulls) it has a positive one. The difference in the sign of the contemporaneous link is in line with the argument in the Animal Economics literature that, while bovines (female or male) are both consumption and capital goods, the value of females as capital tends to be greater than that of males. Moreover, the contemporaneous links are asymmetric (i.e., their absolute magnitude depends on the frequency they are calculated). The temporal links are strong. For female bovines and for small frequencies, the relative prices are likely to lead relative supplies; for male bovines, it holds the opposite.
{"title":"Relative prices and relative supplies in the UK beef meat industry: A wavelet cross-correlation analysis","authors":"Panos Fousekis","doi":"10.1016/j.jeca.2024.e00387","DOIUrl":"10.1016/j.jeca.2024.e00387","url":null,"abstract":"<div><div>The objective of the paper is to assess the contemporaneous and temporal links between the relative beef prices and the composition of beef supply (slaughters) in the UK, using weekly data and wavelet cross-correlation analysis. For female bovine animals (heifers and adult cows) and for most of the frequencies considered, the price ratio has a negative contemporaneous association with the supply ratio while for male bovine animals (steers and young bulls) it has a positive one. The difference in the sign of the contemporaneous link is in line with the argument in the Animal Economics literature that, while bovines (female or male) are both consumption and capital goods, the value of females as capital tends to be greater than that of males. Moreover, the contemporaneous links are asymmetric (i.e., their absolute magnitude depends on the frequency they are calculated). The temporal links are strong. For female bovines and for small frequencies, the relative prices are likely to lead relative supplies; for male bovines, it holds the opposite.</div></div>","PeriodicalId":38259,"journal":{"name":"Journal of Economic Asymmetries","volume":"30 ","pages":"Article e00387"},"PeriodicalIF":0.0,"publicationDate":"2024-09-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142359006","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In the New-Keynesian model augmented with non-Ricardian households (breakdown of the Ricardian equivalence), the elasticity of aggregate demand to changes in real interest rate is linked non-linearly to the share of non-Ricardian households. Importantly, this dependence may result in an upward-sloping dynamic New-Keynesian IS curve. Using an extended fractionally cointegrated VAR model in a recursive framework, we empirically test this for the US from 1959 to 2024, finding a positive long-run relationship between consumption and interest rates from 1980 to 1992, and a negative one from 1993 onwards, with a stronger negative correlation after 2000. These results suggest shifts in asset market participation, altering equilibrium dynamics in the goods market. We analytically show that when non-Ricardian households surpass a certain threshold, output adjusts to excess supply rather than demand, imposing novel restrictions on the New-Keynesian Phillips curve to maintain equilibrium determinacy. These bounds on the New-Keynesian Phillips curve slope under varying inflation targeting rules offer a new perspective on monetary policy design.
在增加了非李嘉图家庭（打破了李嘉图等价关系）的新凯恩斯模型中，总需求对实际利率变化的弹性与非李嘉图家庭的比例呈非线性关系。重要的是，这种依赖性可能导致新凯恩斯主义 IS 曲线向上倾斜。我们使用递归框架下的扩展分数协整 VAR 模型，对美国 1959 年至 2024 年的情况进行了实证检验，发现 1980 年至 1992 年期间消费与利率之间存在正向长期关系，1993 年以后则为负向关系，2000 年以后负相关性更强。这些结果表明，资产市场参与的变化改变了商品市场的均衡动态。我们通过分析表明，当非李嘉图家庭超过一定临界值时，产出会根据过量供给而非需求进行调整，从而对新凯恩斯主义的菲利普斯曲线施加新的限制，以维持均衡的确定性。这些在不同通胀目标规则下对新凯恩斯主义菲利普斯曲线斜率的限制为货币政策设计提供了新的视角。
{"title":"Ricardian equivalence and positively sloped IS curve: (Dis)equilibrium insights","authors":"Xakousti Chrysanthopoulou , Moise Sidiropoulos , Alexandros Tsioutsios","doi":"10.1016/j.jeca.2024.e00385","DOIUrl":"10.1016/j.jeca.2024.e00385","url":null,"abstract":"<div><p>In the New-Keynesian model augmented with non-Ricardian households (breakdown of the Ricardian equivalence), the elasticity of aggregate demand to changes in real interest rate is linked non-linearly to the share of non-Ricardian households. Importantly, this dependence may result in an upward-sloping dynamic New-Keynesian IS curve. Using an extended fractionally cointegrated VAR model in a recursive framework, we empirically test this for the US from 1959 to 2024, finding a positive long-run relationship between consumption and interest rates from 1980 to 1992, and a negative one from 1993 onwards, with a stronger negative correlation after 2000. These results suggest shifts in asset market participation, altering equilibrium dynamics in the goods market. We analytically show that when non-Ricardian households surpass a certain threshold, output adjusts to excess supply rather than demand, imposing novel restrictions on the New-Keynesian Phillips curve to maintain equilibrium determinacy. These bounds on the New-Keynesian Phillips curve slope under varying inflation targeting rules offer a new perspective on monetary policy design.</p></div>","PeriodicalId":38259,"journal":{"name":"Journal of Economic Asymmetries","volume":"30 ","pages":"Article e00385"},"PeriodicalIF":0.0,"publicationDate":"2024-09-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142243974","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-17DOI: 10.1016/j.jeca.2024.e00386
Simon Neaime, Isabelle Gaysset
Using Panel data, GMM and GLS econometric models, and a sample of six Mediterranean (MED) countries (Algeria, Egypt, Jordan, Lebanon, Morocco and Tunisia) over the period 2002–2023, this paper assesses empirically the impact of financial inclusion on income inequality, poverty, and financial stability asymmetries in the MED region. While the empirical literature covering the region is relatively scarce, this paper adds to that literature by bridging a significant existing gap, especially in the aftermath of the recent financial and debt crises and the recent political and social turmoil that have been unfolding in several MED countries. Our empirical results show that financial inclusion decreases inequality but has no significant effect on poverty. Other empirical results show that while the empirical evidence indicates that enhanced financial integration is a contributing factor to financial instability in the MED region, an increase in financial inclusion and in population contributes positively to financial stability.
{"title":"Financial inclusion, integration, and stability asymmetries in the Mediterranean region","authors":"Simon Neaime, Isabelle Gaysset","doi":"10.1016/j.jeca.2024.e00386","DOIUrl":"10.1016/j.jeca.2024.e00386","url":null,"abstract":"<div><p>Using Panel data, GMM and GLS econometric models, and a sample of six Mediterranean (MED) countries (Algeria, Egypt, Jordan, Lebanon, Morocco and Tunisia) over the period 2002–2023, this paper assesses empirically the impact of financial inclusion on income inequality, poverty, and financial stability asymmetries in the MED region. While the empirical literature covering the region is relatively scarce, this paper adds to that literature by bridging a significant existing gap, especially in the aftermath of the recent financial and debt crises and the recent political and social turmoil that have been unfolding in several MED countries. Our empirical results show that financial inclusion decreases inequality but has no significant effect on poverty. Other empirical results show that while the empirical evidence indicates that enhanced financial integration is a contributing factor to financial instability in the MED region, an increase in financial inclusion and in population contributes positively to financial stability.</p></div>","PeriodicalId":38259,"journal":{"name":"Journal of Economic Asymmetries","volume":"30 ","pages":"Article e00386"},"PeriodicalIF":0.0,"publicationDate":"2024-09-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142243975","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2024-09-16DOI: 10.1016/j.jeca.2024.e00384
Jens Klose
In this article, we apply three different specifications of a monetary policy rule to reveal the interest rate preferences of the national central bank governors of the euro area. These preferences are combined with information from the ECB rotation model to determine whether a central bank governor was allowed to vote at a certain meeting. Finally, we empirically test whether non-voting governors or specific countries are worse off when not allowed to vote compared to a situation where they have a voting right. Our results indicate that there are only very few occasions where this is indeed the case. Thus, we conclude that the current form of the rotation model in the euro area does not discriminate any national governor or country.
{"title":"Monetary policy rules and the ECB rotation model","authors":"Jens Klose","doi":"10.1016/j.jeca.2024.e00384","DOIUrl":"10.1016/j.jeca.2024.e00384","url":null,"abstract":"<div><p>In this article, we apply three different specifications of a monetary policy rule to reveal the interest rate preferences of the national central bank governors of the euro area. These preferences are combined with information from the ECB rotation model to determine whether a central bank governor was allowed to vote at a certain meeting. Finally, we empirically test whether non-voting governors or specific countries are worse off when not allowed to vote compared to a situation where they have a voting right. Our results indicate that there are only very few occasions where this is indeed the case. Thus, we conclude that the current form of the rotation model in the euro area does not discriminate any national governor or country.</p></div>","PeriodicalId":38259,"journal":{"name":"Journal of Economic Asymmetries","volume":"30 ","pages":"Article e00384"},"PeriodicalIF":0.0,"publicationDate":"2024-09-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S1703494924000331/pdfft?md5=06d7c86790dd0911777de794afdee29d&pid=1-s2.0-S1703494924000331-main.pdf","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142243973","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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