This study examines whether the purchase of sovereign bonds leads to decreased bank risk and how this impact changes in worse macroeconomic conditions. For a broad picture of macroeconomic shocks, we concentrate on the dimensions of uncertainty (the cross‐sectional dispersion of shocks to bank‐level characteristics) and crises (the global financial crisis and the COVID‐19 contagion). An empirical examination of the Vietnamese banking sector between 2007 and 2021 shows that banks purchasing securities issued by the domestic government tend to have lower risk. However, this impact is relatively weak on average, varying with the measures of bank risk. Through subsample tests, we document that the impact of sovereign bond holdings on bank risk is shaped by banks with high‐risk‐weighted assets and low diversification. Further results designate that sovereign bond holdings are necessary for banks as such activities help significantly lower their risk exposure in periods of crisis and uncertainty. This finding remains robust to different measures of bank risk.
{"title":"Sovereign Bond Holdings, Bank Risk‐Taking, and Macroeconomic Shocks: Evidence From Vietnam","authors":"Japan Huynh","doi":"10.1111/1467-8454.12383","DOIUrl":"https://doi.org/10.1111/1467-8454.12383","url":null,"abstract":"This study examines whether the purchase of sovereign bonds leads to decreased bank risk and how this impact changes in worse macroeconomic conditions. For a broad picture of macroeconomic shocks, we concentrate on the dimensions of uncertainty (the cross‐sectional dispersion of shocks to bank‐level characteristics) and crises (the global financial crisis and the COVID‐19 contagion). An empirical examination of the Vietnamese banking sector between 2007 and 2021 shows that banks purchasing securities issued by the domestic government tend to have lower risk. However, this impact is relatively weak on average, varying with the measures of bank risk. Through subsample tests, we document that the impact of sovereign bond holdings on bank risk is shaped by banks with high‐risk‐weighted assets and low diversification. Further results designate that sovereign bond holdings are necessary for banks as such activities help significantly lower their risk exposure in periods of crisis and uncertainty. This finding remains robust to different measures of bank risk.","PeriodicalId":501500,"journal":{"name":"Australian Economic Papers ","volume":"60 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-09-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142188012","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}
Mohsen Bahmani‐Oskooee, Muhammad Aftab, Huseyin Karamelikli
This study investigates the relationship between exchange rates and trade balance, specifically focusing on Russia's trade dynamics with the Group of Seven (G7) countries. Employing a multifaceted approach, we scrutinize the asymmetric responses evident in the trade balance concerning fluctuations in exchange rates. Our investigation, rooted in linear analysis, initially reveals that rubble depreciation predominantly impacts the Russian trade balance adversely in the short term, albeit demonstrating a positive influence on trade balance in select instances over the long run—an observation aligned with the established J‐curve phenomenon. However, as we transition to nonlinear analysis, our findings yield stronger substantiation for the J‐curve hypothesis. Notably, our research underscores the asymmetric nature of exchange rate changes' effects on trade balance. Moreover, through nonlinear modeling techniques, we observe a pronounced enhancement in the convergence toward establishing a long‐term relationship between these variables. This emphasizes the significance of nonlinear approaches in comprehending the complexities inherent in exchange rate‐trade balance dynamics of Russian trade with G7.
{"title":"Russia's Trade With G7 Countries and Asymmetric J‐Curve Effect","authors":"Mohsen Bahmani‐Oskooee, Muhammad Aftab, Huseyin Karamelikli","doi":"10.1111/1467-8454.12381","DOIUrl":"https://doi.org/10.1111/1467-8454.12381","url":null,"abstract":"This study investigates the relationship between exchange rates and trade balance, specifically focusing on Russia's trade dynamics with the Group of Seven (G7) countries. Employing a multifaceted approach, we scrutinize the asymmetric responses evident in the trade balance concerning fluctuations in exchange rates. Our investigation, rooted in linear analysis, initially reveals that rubble depreciation predominantly impacts the Russian trade balance adversely in the short term, albeit demonstrating a positive influence on trade balance in select instances over the long run—an observation aligned with the established J‐curve phenomenon. However, as we transition to nonlinear analysis, our findings yield stronger substantiation for the J‐curve hypothesis. Notably, our research underscores the asymmetric nature of exchange rate changes' effects on trade balance. Moreover, through nonlinear modeling techniques, we observe a pronounced enhancement in the convergence toward establishing a long‐term relationship between these variables. This emphasizes the significance of nonlinear approaches in comprehending the complexities inherent in exchange rate‐trade balance dynamics of Russian trade with G7.","PeriodicalId":501500,"journal":{"name":"Australian Economic Papers ","volume":"27 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-09-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142224646","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}
Productivity gains enable real wage growth and improved standards of living. But whose income actually benefits from productivity gains when highly productivity urban locations in Australia, and other advanced economies, also are associated with worsening housing affordability and inequality? This paper answers this question by empirically testing whether agglomeration effects vary across the wage distribution in Australia? And, how much of any agglomeration effect is retained by individuals across the wage distribution? Unconditional quantile regressions are employed to analyse changes in agglomeration effects across the before‐ and after‐housing cost wage distribution. Information on individual earnings, housing costs and place of employment is sourced from the Household, Income and Labour Dynamics in Australia (HILDA). The paper utilises four pre‐COVID waves of HILDA (2017–2020) as details on place of employment was first introduced in 2017. Agglomeration indices are constructed from Australian Bureau of Statistics census data using 17 industry (ANZSIC) classifications (2016, 2021). The results show that the before‐housing cost wages of higher‐wage earners typically benefit twice as much as those of lower‐wage earners. However, after adjusting for housing expenditure (mortgage payments and rents) the after‐housing costs wage benefit for the lowest two wage earning deciles disappear and is transferred to owners of real estate. Higher wage earners retain approximately 50%–60% of the agglomeration benefit. It is thus higher wage earner, and owners of land and property, who typically benefit from agglomeration related productivity—often at the expense of lower‐wage earners.
{"title":"Earnings, Productivity and Housing Expenditure: Who Retains the Wage‐Related Agglomeration Effect?","authors":"Christian A. Nygaard","doi":"10.1111/1467-8454.12380","DOIUrl":"https://doi.org/10.1111/1467-8454.12380","url":null,"abstract":"Productivity gains enable real wage growth and improved standards of living. But whose income actually benefits from productivity gains when highly productivity urban locations in Australia, and other advanced economies, also are associated with worsening housing affordability and inequality? This paper answers this question by empirically testing whether agglomeration effects vary across the wage distribution in Australia? And, how much of any agglomeration effect is retained by individuals across the wage distribution? Unconditional quantile regressions are employed to analyse changes in agglomeration effects across the before‐ and after‐housing cost wage distribution. Information on individual earnings, housing costs and place of employment is sourced from the Household, Income and Labour Dynamics in Australia (HILDA). The paper utilises four pre‐COVID waves of HILDA (2017–2020) as details on place of employment was first introduced in 2017. Agglomeration indices are constructed from Australian Bureau of Statistics census data using 17 industry (ANZSIC) classifications (2016, 2021). The results show that the before‐housing cost wages of higher‐wage earners typically benefit twice as much as those of lower‐wage earners. However, after adjusting for housing expenditure (mortgage payments and rents) the after‐housing costs wage benefit for the lowest two wage earning deciles disappear and is transferred to owners of real estate. Higher wage earners retain approximately 50%–60% of the agglomeration benefit. It is thus higher wage earner, and owners of land and property, who typically benefit from agglomeration related productivity—often at the expense of lower‐wage earners.","PeriodicalId":501500,"journal":{"name":"Australian Economic Papers ","volume":"44 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-09-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142188006","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}
The Australian Greens have recently proposed the establishment of a new federal government agency to build 360,000 extra homes over five years. These homes would be sold or rented at below‐market rates. The appraisal of this plan has so far been confined to a fiscal balance perspective, where completed homes are sold, rental income is received, and government administration and borrowing costs are serviced. This ignores the flow‐on effects on the broader economy from expanded residential building construction activity. This paper starts to fill this gap by using a simple Leontief input–output model to analyse a counterfactual in which the Greens' plan is partially implemented into the structure of the Australian economy in 2021–2022. In light of the $84.14 billion static change in the level of total national product that, other things equal, must have occurred to satisfy an augmented final use bill corresponding to the Greens' plan, the simulation finds that projected imposts on the federal budget are rendered relatively modest. Potential extensions and applications of the model for policymakers are considered.JEL Classification: D5, E1, P5
{"title":"The Australian Greens' Public Property Developer: An Input–Output Analysis","authors":"Chad Satterlee","doi":"10.1111/1467-8454.12376","DOIUrl":"https://doi.org/10.1111/1467-8454.12376","url":null,"abstract":"The Australian Greens have recently proposed the establishment of a new federal government agency to build 360,000 extra homes over five years. These homes would be sold or rented at below‐market rates. The appraisal of this plan has so far been confined to a fiscal balance perspective, where completed homes are sold, rental income is received, and government administration and borrowing costs are serviced. This ignores the flow‐on effects on the broader economy from expanded residential building construction activity. This paper starts to fill this gap by using a simple Leontief input–output model to analyse a counterfactual in which the Greens' plan is partially implemented into the structure of the Australian economy in 2021–2022. In light of the $84.14 billion static change in the level of total national product that, other things equal, must have occurred to satisfy an augmented final use bill corresponding to the Greens' plan, the simulation finds that projected imposts on the federal budget are rendered relatively modest. Potential extensions and applications of the model for policymakers are considered.<jats:styled-content style=\"fixed-case\">JEL</jats:styled-content> Classification: D5, E1, P5","PeriodicalId":501500,"journal":{"name":"Australian Economic Papers ","volume":"69 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142188007","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}
Michael A. Kortt, Michael B. Charles, Luan Vinicius Bernardelli, Brian Dollery
Studies using large‐scale survey data from Australia, Germany, and the United States have found evidence that religious affiliation influences earnings, with Catholic men benefitting from a wage premium. This paper examines religious affiliation and human capital formation for males aged 25 and 54 using six waves of data from the Household Income Labour Dynamics Australia (HILDA) survey. This study examines the impact of religious affiliation on male earnings through three main approaches: (i) estimating male earnings functions using various religious groupings, (ii) stratifying the analysis by wave to detect potential changes over time, and (iii) evaluating differences in the return to human capital investment among Anglicans, Catholics, and men with other religious affiliations. Contrary to existing studies, we find no evidence of a Catholic wage premium.
{"title":"Is There Still a Catholic Earnings Premium for Men? Evidence From Australia","authors":"Michael A. Kortt, Michael B. Charles, Luan Vinicius Bernardelli, Brian Dollery","doi":"10.1111/1467-8454.12377","DOIUrl":"https://doi.org/10.1111/1467-8454.12377","url":null,"abstract":"Studies using large‐scale survey data from Australia, Germany, and the United States have found evidence that religious affiliation influences earnings, with Catholic men benefitting from a wage premium. This paper examines religious affiliation and human capital formation for males aged 25 and 54 using six waves of data from the Household Income Labour Dynamics Australia (HILDA) survey. This study examines the impact of religious affiliation on male earnings through three main approaches: (i) estimating male earnings functions using various religious groupings, (ii) stratifying the analysis by wave to detect potential changes over time, and (iii) evaluating differences in the return to human capital investment among Anglicans, Catholics, and men with other religious affiliations. Contrary to existing studies, we find no evidence of a Catholic wage premium.","PeriodicalId":501500,"journal":{"name":"Australian Economic Papers ","volume":"84 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-08-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142188010","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}
Beaches are iconic in Australian culture. However, coastal areas are intrinsically hazardous, given the nature of recreational beach activities. The need for beach regulation and safety services has spawned a vast network of voluntary life‐saving clubs across Australia that operate collaboratively with local government and volunteers. In this paper, we examine the operation of Surf Life Saving New South Wales (SLSNSW) through the analytical lens of local co‐production. We argue that the effectiveness of SLSNSW can be mainly ascribed to the efficacious manner in which SLSNSW, local councils and volunteers have been combined to generate beach safety services.
{"title":"Local co‐production in safety service provision: The case of Surf Life Saving in New South Wales","authors":"Owen Hogan, Brian Dollery, Michael A. Kortt","doi":"10.1111/1467-8454.12373","DOIUrl":"https://doi.org/10.1111/1467-8454.12373","url":null,"abstract":"Beaches are iconic in Australian culture. However, coastal areas are intrinsically hazardous, given the nature of recreational beach activities. The need for beach regulation and safety services has spawned a vast network of voluntary life‐saving clubs across Australia that operate collaboratively with local government and volunteers. In this paper, we examine the operation of Surf Life Saving New South Wales (SLSNSW) through the analytical lens of local co‐production. We argue that the effectiveness of SLSNSW can be mainly ascribed to the efficacious manner in which SLSNSW, local councils and volunteers have been combined to generate beach safety services.","PeriodicalId":501500,"journal":{"name":"Australian Economic Papers ","volume":"14 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-07-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141608999","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 this study, we use a supply and demand model to estimate housing supply elasticity in New South Wales Australia based on yearly data for the 126 local government areas from 1991 to 2019, and investigate effects of supply elasticity on responses of housing prices and new constructions to housing price bubbles from 2002 to 2004. In particular, when conducting supply elasticity estimation, we use multi‐factor error structures to address cross‐sectional dependence issues, which is ignored by previous studies. We find that the supply elasticity estimates are statistically significant at the state level (0.36), in the regional coastal area (0.97) and in the regional inland area (0.41 but can be inconsistent and inefficient due to cross‐sectional dependence), while perfectly inelastic in the metropolitan area. Effects of supply elasticity on the market responses to bubbles are largely affected by market heterogeneity such as overall supply elasticity levels and demand degrees. The findings may compensate for the limitations of the theory in Glaeser et al. (2008, J Urban Econ, 64:198–217) and offer potential avenues for future development of the theory. Our results implies that bubbles promote development in elastic areas of the metropolitan market and inelastic areas of the regional coastal market, and that balancing urban and regional development is important for dealing with bubble‐related affordability issues.
{"title":"The supply elasticity and housing price bubbles in New South Wales, Australia","authors":"Yi Ding, Xiangling Liu","doi":"10.1111/1467-8454.12372","DOIUrl":"https://doi.org/10.1111/1467-8454.12372","url":null,"abstract":"In this study, we use a supply and demand model to estimate housing supply elasticity in New South Wales Australia based on yearly data for the 126 local government areas from 1991 to 2019, and investigate effects of supply elasticity on responses of housing prices and new constructions to housing price bubbles from 2002 to 2004. In particular, when conducting supply elasticity estimation, we use multi‐factor error structures to address cross‐sectional dependence issues, which is ignored by previous studies. We find that the supply elasticity estimates are statistically significant at the state level (0.36), in the regional coastal area (0.97) and in the regional inland area (0.41 but can be inconsistent and inefficient due to cross‐sectional dependence), while perfectly inelastic in the metropolitan area. Effects of supply elasticity on the market responses to bubbles are largely affected by market heterogeneity such as overall supply elasticity levels and demand degrees. The findings may compensate for the limitations of the theory in Glaeser et al. (2008, J Urban Econ, 64:198–217) and offer potential avenues for future development of the theory. Our results implies that bubbles promote development in elastic areas of the metropolitan market and inelastic areas of the regional coastal market, and that balancing urban and regional development is important for dealing with bubble‐related affordability issues.","PeriodicalId":501500,"journal":{"name":"Australian Economic Papers ","volume":"55 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-07-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141570047","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}
This article introduces the productivity heterogeneity of Melitz, M. J. (2003). Econometrica, 71(6), 1695–1725 into the footloose entrepreneur model of Forslid, R., and Ottaviano, G. I. (2003). Journal of Economic Geography, 3(3), 229–240 to explore the industrial spatial distribution between two regions. We suggest a negative relationship between the shape parameter of the Pareto distribution and the share of skilled workers in a region. It enhances the escape competition effect to avoid agglomeration when the share of skilled workers in a region increases to generate intensified competition. This effect allows the equal distribution outcome to be sustained for a larger range of transport costs.
本文将 Melitz, M. J. (2003) 的生产率异质性引入 Forslid, R. 和 Ottaviano, G. I. (2003) 的脚步松散型企业家模型。Econometrica, 71(6), 1695-1725 into the footloose entrepreneur model of Forslid, R., and Ottaviano, G. I. (2003).经济地理学报》，3(3)，229-240。我们发现，帕累托分布的形状参数与一个地区技术工人的比例之间存在负相关关系。当一个地区的技术工人所占份额增加以产生强化竞争时，它会增强逃避竞争效应，从而避免集聚。这种效应使平等分布结果在更大的运输成本范围内得以维持。
{"title":"A footloose entrepreneur model with productivity heterogeneity in two regions","authors":"Po‐Hao Lu, Jyh‐Fa Tsai","doi":"10.1111/1467-8454.12370","DOIUrl":"https://doi.org/10.1111/1467-8454.12370","url":null,"abstract":"This article introduces the productivity heterogeneity of Melitz, M. J. (2003). <jats:italic>Econometrica</jats:italic>, 71(6), 1695–1725 into the footloose entrepreneur model of Forslid, R., and Ottaviano, G. I. (2003). <jats:italic>Journal of Economic Geography</jats:italic>, 3(3), 229–240 to explore the industrial spatial distribution between two regions. We suggest a negative relationship between the shape parameter of the Pareto distribution and the share of skilled workers in a region. It enhances the escape competition effect to avoid agglomeration when the share of skilled workers in a region increases to generate intensified competition. This effect allows the equal distribution outcome to be sustained for a larger range of transport costs.","PeriodicalId":501500,"journal":{"name":"Australian Economic Papers ","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-07-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141522841","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}
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