Pub Date : 2023-11-07DOI: 10.1108/jes-05-2023-0264
Cristian Barra, Pasquale Marcello Falcone
Purpose The paper aims at addressing the following research questions: does institutional quality improve countries' environmental efficiency? And which pillars of institutional quality improve countries' environmental efficiency? Design/methodology/approach By specifying a directional distance function in the context of stochastic frontier method where GHG emissions are considered as the bad output and the GDP is referred as the desirable one, the work computes the environmental efficiency into the appraisal of a production function for the European countries over three decades. Findings According to the countries' performance, the findings confirm that high and upper middle-income countries have higher environmental efficiency compared to low middle-income countries. In this environmental context, the role of institutional quality turns out to be really important in improving the environmental efficiency for high income countries. Originality/value This article attempts to analyze the role of different dimensions of institutional quality in different European countries' performance – in terms of mitigating GHGs (undesirable output) – while trying to raise their economic performance through their GDP (desirable output). Highlights The paper aims at addressing the following research question: does institutional quality improve countries' environmental efficiency? We adopt a directional distance function in the context of stochastic frontier method, considering 40 European economies over a 30-year time interval. The findings confirm that high and upper middle-income countries have higher environmental efficiency compared to low middle-income countries. The role of institutional quality turns out to be really important in improving the environmental efficiency for high income countries, while the performance decreases for the low middle-income countries.
{"title":"Cross country comparisons of environmental efficiency under institutional quality. Evidence from European economies","authors":"Cristian Barra, Pasquale Marcello Falcone","doi":"10.1108/jes-05-2023-0264","DOIUrl":"https://doi.org/10.1108/jes-05-2023-0264","url":null,"abstract":"Purpose The paper aims at addressing the following research questions: does institutional quality improve countries' environmental efficiency? And which pillars of institutional quality improve countries' environmental efficiency? Design/methodology/approach By specifying a directional distance function in the context of stochastic frontier method where GHG emissions are considered as the bad output and the GDP is referred as the desirable one, the work computes the environmental efficiency into the appraisal of a production function for the European countries over three decades. Findings According to the countries' performance, the findings confirm that high and upper middle-income countries have higher environmental efficiency compared to low middle-income countries. In this environmental context, the role of institutional quality turns out to be really important in improving the environmental efficiency for high income countries. Originality/value This article attempts to analyze the role of different dimensions of institutional quality in different European countries' performance – in terms of mitigating GHGs (undesirable output) – while trying to raise their economic performance through their GDP (desirable output). Highlights The paper aims at addressing the following research question: does institutional quality improve countries' environmental efficiency? We adopt a directional distance function in the context of stochastic frontier method, considering 40 European economies over a 30-year time interval. The findings confirm that high and upper middle-income countries have higher environmental efficiency compared to low middle-income countries. The role of institutional quality turns out to be really important in improving the environmental efficiency for high income countries, while the performance decreases for the low middle-income countries.","PeriodicalId":47604,"journal":{"name":"JOURNAL OF ECONOMIC STUDIES","volume":"63 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135476601","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 : 2023-11-07DOI: 10.1108/jes-06-2023-0299
Francisco Rodríguez
Purpose The use of economic sanctions has grown dramatically in recent decades. Nevertheless, many arguments are presented in the public policy space regarding their effects on target populations. The author presents the first systematic analysis of the effects of sanctions on living conditions in target countries. Design/methodology/approach This paper provides a comprehensive survey and assessment of the literature on the effects of economic sanctions on living standards in target countries. The author identifies 31 studies that apply quantitative econometric or calibration methods to cross-country and national data to assess the impact of economic sanctions on indicators of human and economic development. The author provides in-depth discussions of three sanctions episodes—Iran, Afghanistan and Venezuela—that illustrate the channels through which sanctions affect living conditions in target countries. Findings Of the 31 studies, 30 find that sanctions have negative effects on outcomes ranging from per capita income to poverty, inequality, mortality and human rights. The author provides new results showing that 54 countries—27% of all countries and 29% of the world economy— are sanctioned today, up from only 4% of countries in the 1960s. In the three cases discussed, sanctions that restricted the access of governments to foreign exchange limited the ability of states to provide essential public goods and services and generated substantial negative spillovers on private sector and nongovernmental actors. Originality/value This is the first literature survey that systematically assesses the quantitative evidence on the effect of sanctions on living conditions in target countries.
{"title":"The human consequences of economic sanctions","authors":"Francisco Rodríguez","doi":"10.1108/jes-06-2023-0299","DOIUrl":"https://doi.org/10.1108/jes-06-2023-0299","url":null,"abstract":"Purpose The use of economic sanctions has grown dramatically in recent decades. Nevertheless, many arguments are presented in the public policy space regarding their effects on target populations. The author presents the first systematic analysis of the effects of sanctions on living conditions in target countries. Design/methodology/approach This paper provides a comprehensive survey and assessment of the literature on the effects of economic sanctions on living standards in target countries. The author identifies 31 studies that apply quantitative econometric or calibration methods to cross-country and national data to assess the impact of economic sanctions on indicators of human and economic development. The author provides in-depth discussions of three sanctions episodes—Iran, Afghanistan and Venezuela—that illustrate the channels through which sanctions affect living conditions in target countries. Findings Of the 31 studies, 30 find that sanctions have negative effects on outcomes ranging from per capita income to poverty, inequality, mortality and human rights. The author provides new results showing that 54 countries—27% of all countries and 29% of the world economy— are sanctioned today, up from only 4% of countries in the 1960s. In the three cases discussed, sanctions that restricted the access of governments to foreign exchange limited the ability of states to provide essential public goods and services and generated substantial negative spillovers on private sector and nongovernmental actors. Originality/value This is the first literature survey that systematically assesses the quantitative evidence on the effect of sanctions on living conditions in target countries.","PeriodicalId":47604,"journal":{"name":"JOURNAL OF ECONOMIC STUDIES","volume":"64 5","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135476750","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 : 2023-11-06DOI: 10.1108/jes-05-2023-0254
Luccas Assis Attílio
Purpose This article analyzes the impact of monetary policy on income inequality across 16 advanced economies. The author investigates three key points: (1) the relationship between domestic monetary policy and domestic income inequality, (2) the spillover effect of USA monetary policy (including quantitative easing) on international inequality and (3) the quantitative influence of the monetary policies of both the USA and the Eurozone on the formation of domestic income inequalities. Design/methodology/approach The author employed the Global Vector Autoregressive (GVAR) model, which uses Vector Autoregressive with Exogenous Variables (VARXs) models of each economy to build an integrated system that enables us to evaluate individual responses to global shocks. Findings The author's analysis reveals that (1) contractionary monetary policy exacerbates domestic inequality and (2) USA monetary policy, including quantitative easing, affects international inequality. Furthermore, the author's variance decomposition analysis highlights that USA monetary policy is especially influential on income inequality in Norway and Sweden. Additionally, the cointegrating analysis confirms that monetary policy's impact on inequality persists in the long term. Originality/value Most of the studies focused on investigating domestic economies as closed economies. However, the author's approach differs in that the author uses the GVAR, which treats all economies as open. This allows us to incorporate the world economy into the domestic dynamics and connect the economies using bilateral trade. Another advantage of the GVAR is that it captures spillover effects by modeling each economy and constructing the international economy.
{"title":"Does monetary policy impact income inequality?","authors":"Luccas Assis Attílio","doi":"10.1108/jes-05-2023-0254","DOIUrl":"https://doi.org/10.1108/jes-05-2023-0254","url":null,"abstract":"Purpose This article analyzes the impact of monetary policy on income inequality across 16 advanced economies. The author investigates three key points: (1) the relationship between domestic monetary policy and domestic income inequality, (2) the spillover effect of USA monetary policy (including quantitative easing) on international inequality and (3) the quantitative influence of the monetary policies of both the USA and the Eurozone on the formation of domestic income inequalities. Design/methodology/approach The author employed the Global Vector Autoregressive (GVAR) model, which uses Vector Autoregressive with Exogenous Variables (VARXs) models of each economy to build an integrated system that enables us to evaluate individual responses to global shocks. Findings The author's analysis reveals that (1) contractionary monetary policy exacerbates domestic inequality and (2) USA monetary policy, including quantitative easing, affects international inequality. Furthermore, the author's variance decomposition analysis highlights that USA monetary policy is especially influential on income inequality in Norway and Sweden. Additionally, the cointegrating analysis confirms that monetary policy's impact on inequality persists in the long term. Originality/value Most of the studies focused on investigating domestic economies as closed economies. However, the author's approach differs in that the author uses the GVAR, which treats all economies as open. This allows us to incorporate the world economy into the domestic dynamics and connect the economies using bilateral trade. Another advantage of the GVAR is that it captures spillover effects by modeling each economy and constructing the international economy.","PeriodicalId":47604,"journal":{"name":"JOURNAL OF ECONOMIC STUDIES","volume":"43 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135634648","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 : 2023-11-06DOI: 10.1108/jes-04-2023-0206
Rizky Yudaruddin, Dadang Lesmana
Purpose This study aims to investigate the market reaction to the Russian invasion of Ukraine, specifically in the banking sector. Design/methodology/approach The research uses an event study and cross-sectional analysis, with market reaction measured by cumulative abnormal return (CAR). The sample comprised 1,126 banks. Findings The results show that the market reacted negatively to the invasion both before and after its announcement. Developed and emerging markets saw a negative impact from the invasion, while frontier markets experienced only a slight impact. The authors also find that the banking markets of North Atlantic Treaty Organization (NATO) members reacted significantly and negatively both before and after the invasion was announced. This demonstrates that the negative market reaction of NATO members was more impactful than that of other markets. Overall, this study shows that investors in the banking market are very sensitive to war. Originality/value This is the first study to provide international evidence, specifically on the banking sector's reaction during the Russian invasion of Ukraine.
{"title":"Banking sector's reaction during the Russian invasion of Ukraine: who reacted the most?","authors":"Rizky Yudaruddin, Dadang Lesmana","doi":"10.1108/jes-04-2023-0206","DOIUrl":"https://doi.org/10.1108/jes-04-2023-0206","url":null,"abstract":"Purpose This study aims to investigate the market reaction to the Russian invasion of Ukraine, specifically in the banking sector. Design/methodology/approach The research uses an event study and cross-sectional analysis, with market reaction measured by cumulative abnormal return (CAR). The sample comprised 1,126 banks. Findings The results show that the market reacted negatively to the invasion both before and after its announcement. Developed and emerging markets saw a negative impact from the invasion, while frontier markets experienced only a slight impact. The authors also find that the banking markets of North Atlantic Treaty Organization (NATO) members reacted significantly and negatively both before and after the invasion was announced. This demonstrates that the negative market reaction of NATO members was more impactful than that of other markets. Overall, this study shows that investors in the banking market are very sensitive to war. Originality/value This is the first study to provide international evidence, specifically on the banking sector's reaction during the Russian invasion of Ukraine.","PeriodicalId":47604,"journal":{"name":"JOURNAL OF ECONOMIC STUDIES","volume":"51 5","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135585063","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 : 2023-11-01DOI: 10.1108/jes-05-2023-0228
Damir Tokic, Dave Jackson
Purpose This study is motivated in part by the fact that the unfolding 2022 bear market, which has reached the −25% drawdown, has not been preceded by the inverted 10Y-3 m spread or an inverted near-term forward spread. Design/methodology/approach The authors develop a three-factor probit model to predict/explain the deep stock market drawdowns, which the authors define as the drawdowns in excess of 20%. Findings The study results show that (1) the rising credit risk predicts a deep drawdown about a year in advance and (2) the monetary policy easing precedes an imminent drawdown below the 20% threshold. Originality/value This study three-factor probit model shows adaptability beyond the typical recessionary bear market and predicts/explains the liquidity-based selloffs, like the 2022 and possibly the 1987 deep drawdowns.
{"title":"A probit-based analysis of the deep stock market drawdowns","authors":"Damir Tokic, Dave Jackson","doi":"10.1108/jes-05-2023-0228","DOIUrl":"https://doi.org/10.1108/jes-05-2023-0228","url":null,"abstract":"Purpose This study is motivated in part by the fact that the unfolding 2022 bear market, which has reached the −25% drawdown, has not been preceded by the inverted 10Y-3 m spread or an inverted near-term forward spread. Design/methodology/approach The authors develop a three-factor probit model to predict/explain the deep stock market drawdowns, which the authors define as the drawdowns in excess of 20%. Findings The study results show that (1) the rising credit risk predicts a deep drawdown about a year in advance and (2) the monetary policy easing precedes an imminent drawdown below the 20% threshold. Originality/value This study three-factor probit model shows adaptability beyond the typical recessionary bear market and predicts/explains the liquidity-based selloffs, like the 2022 and possibly the 1987 deep drawdowns.","PeriodicalId":47604,"journal":{"name":"JOURNAL OF ECONOMIC STUDIES","volume":"48 6","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135271917","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 : 2023-10-30DOI: 10.1108/jes-06-2023-0293
Muhammad Kazim Nur Sohad, Giuseppe Celi, Edgardo Sica
Purpose This article explores the migration intentions (MIs) embedded in population movements from rural to urban areas in Bangladesh. In this country, urban-centric development policies have made cities epicentres of commerce and industrialisation, offering significant employment and livelihood opportunities. This rapid transformation has generated several socio-psychological factors that are influencing the willingness of rural populations to migrate to cities for better jobs, lifestyles and services. Design/methodology/approach The present study adopted the theory of planned behaviour (TPB) as a conceptual model to assess the behavioural and psychological factors underlying MIs. Findings The results of the structural equation modelling (SEM) indicate that MIs are mainly influenced by subjective norms (SN) and, to a lesser extent, attitudes towards migration (ATM) and perceived behavioural control (PBC). Originality/value The analysis drew on an original dataset built through interviews with migrants from rural areas employed in the ready-made garment (RMG) industry in four selective areas of the Metropolitan City of Chittagong.
{"title":"Factors determining migration intentions in Bangladesh: from land to factory","authors":"Muhammad Kazim Nur Sohad, Giuseppe Celi, Edgardo Sica","doi":"10.1108/jes-06-2023-0293","DOIUrl":"https://doi.org/10.1108/jes-06-2023-0293","url":null,"abstract":"Purpose This article explores the migration intentions (MIs) embedded in population movements from rural to urban areas in Bangladesh. In this country, urban-centric development policies have made cities epicentres of commerce and industrialisation, offering significant employment and livelihood opportunities. This rapid transformation has generated several socio-psychological factors that are influencing the willingness of rural populations to migrate to cities for better jobs, lifestyles and services. Design/methodology/approach The present study adopted the theory of planned behaviour (TPB) as a conceptual model to assess the behavioural and psychological factors underlying MIs. Findings The results of the structural equation modelling (SEM) indicate that MIs are mainly influenced by subjective norms (SN) and, to a lesser extent, attitudes towards migration (ATM) and perceived behavioural control (PBC). Originality/value The analysis drew on an original dataset built through interviews with migrants from rural areas employed in the ready-made garment (RMG) industry in four selective areas of the Metropolitan City of Chittagong.","PeriodicalId":47604,"journal":{"name":"JOURNAL OF ECONOMIC STUDIES","volume":"42 ","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136019030","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 : 2023-10-20DOI: 10.1108/jes-08-2023-0401
Gaetano Lisi
Purpose This study deals with the main issues concerning the interplay between homeownership and labour market outcomes, namely (1) the relation between homeownership and labour market outcomes, at both the individual level and the aggregate level, and (2) the relation between homeownership and human capital. Design/methodology/approach This paper is both theoretical and empirical. A search and matching model of the labour market is developed to explain the strong relation between mortgage markets and wages. A regional panel analysis in Italy is used to verify the interplay between homeownership and wages. Findings Homeownership is not, by itself, a condition for receiving higher wages, but rather higher wages increase the probability to become a homeowner, since they positively affect the probability of acquiring a mortgage from the bank. Eventually, wages cause homeownership, but the reverse may not be true. Research limitations/implications The paper focuses on the labour market, while the housing market model is restricted to the mortgage market. Practical implications The positive effect of homeownership on wages is hard to theoretically formalise and is not empirically proven. Before investigating a (potential) bidirectional relationship between homeownership and labour market outcomes, therefore, the related literature should assume a new theoretical link between homeowners and wages. Social implications The result that “homeownership is not, by itself, a condition for receiving higher wages” has positive implications for human and social development. If homeownership could lead to better labour market outcomes, indeed, socio-economic inequalities would increase in the society, because homeownership would be the starting point of a “lucky” circle that increases the well-being of people who are already wealthy. Originality/value First, this study clearly explains why the microeconomic result that homeowners are more likely to be employed than tenants is consistent – at the aggregate level – with a negative relation between homeownership and better labour market outcomes. Second, the related literature has largely ignored the social implications of the topic. A potential bidirectional relation between homeownership and (better) labour market outcomes, indeed, could imply an increase in the well-being of people who are already wealthy.
{"title":"Mortgage market, wages and homeownership","authors":"Gaetano Lisi","doi":"10.1108/jes-08-2023-0401","DOIUrl":"https://doi.org/10.1108/jes-08-2023-0401","url":null,"abstract":"Purpose This study deals with the main issues concerning the interplay between homeownership and labour market outcomes, namely (1) the relation between homeownership and labour market outcomes, at both the individual level and the aggregate level, and (2) the relation between homeownership and human capital. Design/methodology/approach This paper is both theoretical and empirical. A search and matching model of the labour market is developed to explain the strong relation between mortgage markets and wages. A regional panel analysis in Italy is used to verify the interplay between homeownership and wages. Findings Homeownership is not, by itself, a condition for receiving higher wages, but rather higher wages increase the probability to become a homeowner, since they positively affect the probability of acquiring a mortgage from the bank. Eventually, wages cause homeownership, but the reverse may not be true. Research limitations/implications The paper focuses on the labour market, while the housing market model is restricted to the mortgage market. Practical implications The positive effect of homeownership on wages is hard to theoretically formalise and is not empirically proven. Before investigating a (potential) bidirectional relationship between homeownership and labour market outcomes, therefore, the related literature should assume a new theoretical link between homeowners and wages. Social implications The result that “homeownership is not, by itself, a condition for receiving higher wages” has positive implications for human and social development. If homeownership could lead to better labour market outcomes, indeed, socio-economic inequalities would increase in the society, because homeownership would be the starting point of a “lucky” circle that increases the well-being of people who are already wealthy. Originality/value First, this study clearly explains why the microeconomic result that homeowners are more likely to be employed than tenants is consistent – at the aggregate level – with a negative relation between homeownership and better labour market outcomes. Second, the related literature has largely ignored the social implications of the topic. A potential bidirectional relation between homeownership and (better) labour market outcomes, indeed, could imply an increase in the well-being of people who are already wealthy.","PeriodicalId":47604,"journal":{"name":"JOURNAL OF ECONOMIC STUDIES","volume":"35 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135567084","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 : 2023-10-19DOI: 10.1108/jes-10-2022-0513
Haytem Troug
Purpose Despite being a flexible tool that can address several macroeconomic issues, Dynamic Stochastic General Equilibrium (DSGE) models have been rarely used to analyse the interaction between monetary and fiscal policy until the post-financial crisis, leaving a gap in the analysis of how government consumption affects the transmission mechanism of monetary policy. This motivates this paper to analyse how government consumption affects the dynamics of a small open economy, once the former is included in a non-separable form to the utility function. To the best of the authors' knowledge, this issue has not been addressed by the literature, and the authors aim to do so in this paper. Design/methodology/approach A standard New Keynesian model for a small open economy is used to allow for the presence of non-separable government consumption in the utility function. The model is supported by panel regressions. Findings The inclusion of Government consumption dampens the transmission mechanism of monetary policy. The degree of openness dampens the crowding out effect of fiscal policy to monetary policy, as the exchange rate channel empowers it. Empirical estimates for 35 OECD countries support the theoretical findings of the model. Originality/value The effect of government consumption on the transmission mechanism of MP has not been addressed in the literature. This paper contributes to the literature by addressing this issue. Highlights: • The inclusion of Government consumption dampens the transmission mechanism of monetary policy. • The degree of openness alleviates the crowding out effect of fiscal policy to monetary policy, as the exchange rate channel empowers it. • Empirical estimates for 35 OECD countries support the theoretical findings of the model.
{"title":"Monetary policy in a small open economy with non-separable government spending","authors":"Haytem Troug","doi":"10.1108/jes-10-2022-0513","DOIUrl":"https://doi.org/10.1108/jes-10-2022-0513","url":null,"abstract":"Purpose Despite being a flexible tool that can address several macroeconomic issues, Dynamic Stochastic General Equilibrium (DSGE) models have been rarely used to analyse the interaction between monetary and fiscal policy until the post-financial crisis, leaving a gap in the analysis of how government consumption affects the transmission mechanism of monetary policy. This motivates this paper to analyse how government consumption affects the dynamics of a small open economy, once the former is included in a non-separable form to the utility function. To the best of the authors' knowledge, this issue has not been addressed by the literature, and the authors aim to do so in this paper. Design/methodology/approach A standard New Keynesian model for a small open economy is used to allow for the presence of non-separable government consumption in the utility function. The model is supported by panel regressions. Findings The inclusion of Government consumption dampens the transmission mechanism of monetary policy. The degree of openness dampens the crowding out effect of fiscal policy to monetary policy, as the exchange rate channel empowers it. Empirical estimates for 35 OECD countries support the theoretical findings of the model. Originality/value The effect of government consumption on the transmission mechanism of MP has not been addressed in the literature. This paper contributes to the literature by addressing this issue. Highlights: • The inclusion of Government consumption dampens the transmission mechanism of monetary policy. • The degree of openness alleviates the crowding out effect of fiscal policy to monetary policy, as the exchange rate channel empowers it. • Empirical estimates for 35 OECD countries support the theoretical findings of the model.","PeriodicalId":47604,"journal":{"name":"JOURNAL OF ECONOMIC STUDIES","volume":"20 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135666990","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 : 2023-10-17DOI: 10.1108/jes-02-2023-0092
Van Thi Cam Ha, Trinh Nguyen Chau, Tra Thi Thu Pham, Duy Nguyen
Purpose This analysis examines the relationship between corruption and firm productivity in Vietnam. Design/methodology/approach The authors apply the system generalized method of moments estimation approach on a panel dataset constructed from comprehensive enterprise surveys covering all the sectors over the 2011–2020 period. Findings The results confirm a non-linear relationship between corruption and firm productivity. Where corruption is severe, leaving corruption alone tends to benefit firm productivity because efforts to control corruption are likely to cause greater delays. In less corrupt provinces, corruption appears to harm firm productivity while efforts to control corruption provide significant productivity gains. This U-shaped relationship is confirmed for small firms and those in the private sector sub-samples. Intriguingly, this study reveals that the U-shaped relationship does not apply to micro, medium, large firms, state-owned firms and foreign-invested firms because corruption is found to have no significant impact on productivity among these sub-samples. Changes in regulations after 2014 toward promoting a transparent business environment are shown to foster the positive impact of lowering corruption on firm productivity. Research limitations/implications This study suggests that lowering corruption is beneficial for firm productivity at the micro level. However, where corruption is severe, monitoring corruption alone is likely to cause adverse effects on productivity due to increased bureaucratic delays. Institutional reforms might play an important role in leveraging the effects of lowering corruption on productivity in highly corrupt areas. Originality/value This paper sheds new light on the relationship between corruption and firm productivity in the broad existing literature and especially in the limited number of studies for Vietnam.
{"title":"Does corruption grease or sand the wheels of firm productivity? Evidence of a non-linear relationship from a firm-level analysis in Vietnam","authors":"Van Thi Cam Ha, Trinh Nguyen Chau, Tra Thi Thu Pham, Duy Nguyen","doi":"10.1108/jes-02-2023-0092","DOIUrl":"https://doi.org/10.1108/jes-02-2023-0092","url":null,"abstract":"Purpose This analysis examines the relationship between corruption and firm productivity in Vietnam. Design/methodology/approach The authors apply the system generalized method of moments estimation approach on a panel dataset constructed from comprehensive enterprise surveys covering all the sectors over the 2011–2020 period. Findings The results confirm a non-linear relationship between corruption and firm productivity. Where corruption is severe, leaving corruption alone tends to benefit firm productivity because efforts to control corruption are likely to cause greater delays. In less corrupt provinces, corruption appears to harm firm productivity while efforts to control corruption provide significant productivity gains. This U-shaped relationship is confirmed for small firms and those in the private sector sub-samples. Intriguingly, this study reveals that the U-shaped relationship does not apply to micro, medium, large firms, state-owned firms and foreign-invested firms because corruption is found to have no significant impact on productivity among these sub-samples. Changes in regulations after 2014 toward promoting a transparent business environment are shown to foster the positive impact of lowering corruption on firm productivity. Research limitations/implications This study suggests that lowering corruption is beneficial for firm productivity at the micro level. However, where corruption is severe, monitoring corruption alone is likely to cause adverse effects on productivity due to increased bureaucratic delays. Institutional reforms might play an important role in leveraging the effects of lowering corruption on productivity in highly corrupt areas. Originality/value This paper sheds new light on the relationship between corruption and firm productivity in the broad existing literature and especially in the limited number of studies for Vietnam.","PeriodicalId":47604,"journal":{"name":"JOURNAL OF ECONOMIC STUDIES","volume":"72 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135992588","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 : 2023-10-16DOI: 10.1108/jes-04-2023-0205
Helder Ferreira de Mendonça, Cristiane Nascimento de Lima
Purpose This paper aims to contribute to the analysis concerning how inflation forecasts from different economic agents (professional forecasters and consumers) lead to varying levels of central bank credibility and how it affects the monetary policy interest rate and its expectations. Design/methodology/approach Based on the Brazilian economy data from June 2007 to May 2022, the authors provide evidence that is useful for search mechanisms that improve the conduct of monetary policy through the management of inflation expectations. The authors perform several ordinary least squares and generalized method of moments regressions inspired by the Taylor rule principle. In brief, the benchmark model considers that the monetary policy interest rate and its expectations respond to departures of inflation expectations to the target (a proxy for central bank credibility) and the level of economic activity. Findings The main result of the analysis is that inflation expectations from professional forecasters and consumers imply different perceptions of central bank credibility that affect the monetary policy interest rate and expectations for horizons until one year ahead. Originality/value The novelty that the authors bring from the analysis is that the authors calculate central bank credibility by taking into account the “public beliefs” of different economic agents. Furthermore, the authors analyze the effect of central bank credibility from professional forecasters and consumers on the monetary policy interest rate and its expectations.
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