Abstract We investigate the bilateral relationship between government budget balances and current account balances for Germany and Portugal. We find that the response of the current account balance to the budget balance is greater in Portugal than in Germany. On the other hand, the response of the budget balance to the current balance is higher in Germany than in Portugal. In Germany and Portugal, a fiscal rules index has a negative impact on the current account balance and the government effectiveness index has a positive impact on the government balance. The public debt‐to‐GDP ratio positively affects the current account balance in Portugal while the output gap has a negative influence, and that is not the case in Germany. During the period of implementation of the external assistance programme in Portugal, the current account balance improved, while the government balance did not. Finally, Germany's output gap positively influences Portugal's fiscal position.
{"title":"Fiscal and current account imbalances: The cases of Germany and Portugal","authors":"António Afonso, José Carlos Coelho","doi":"10.1111/twec.13528","DOIUrl":"https://doi.org/10.1111/twec.13528","url":null,"abstract":"Abstract We investigate the bilateral relationship between government budget balances and current account balances for Germany and Portugal. We find that the response of the current account balance to the budget balance is greater in Portugal than in Germany. On the other hand, the response of the budget balance to the current balance is higher in Germany than in Portugal. In Germany and Portugal, a fiscal rules index has a negative impact on the current account balance and the government effectiveness index has a positive impact on the government balance. The public debt‐to‐GDP ratio positively affects the current account balance in Portugal while the output gap has a negative influence, and that is not the case in Germany. During the period of implementation of the external assistance programme in Portugal, the current account balance improved, while the government balance did not. Finally, Germany's output gap positively influences Portugal's fiscal position.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"113 8","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135137603","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}
Abstract This paper analyzes environmental convergence and its determinants. We construct our analysis in a bilateral setting and hypothesize that, through foreign direct investment (FDI), one or more investor countries could impact the environmental performance of their hosts, leading thus to a possible environmental convergence between home and host economies. To do this, we construct an original database on bilateral FDI encompassing 128 countries for the period 2000–2012. Our results suggest that, in general, FDI does not directly impact environmental convergence, except for the case of FDI originating from major investor countries. Under specific conditions, FDI can be expected to influence environmental convergence along with other variables such as GDP per capita, industrial development, geographical proximity, or cultural and historical ties. Overall, these effects may vary depending on the type of partnership considered (North–North, North–South, South–North, and South–South).
{"title":"How bilateral foreign direct investment influences environmental convergence","authors":"Vignawou Lucien Ahouangbe, Camelia Turcu","doi":"10.1111/twec.13532","DOIUrl":"https://doi.org/10.1111/twec.13532","url":null,"abstract":"Abstract This paper analyzes environmental convergence and its determinants. We construct our analysis in a bilateral setting and hypothesize that, through foreign direct investment (FDI), one or more investor countries could impact the environmental performance of their hosts, leading thus to a possible environmental convergence between home and host economies. To do this, we construct an original database on bilateral FDI encompassing 128 countries for the period 2000–2012. Our results suggest that, in general, FDI does not directly impact environmental convergence, except for the case of FDI originating from major investor countries. Under specific conditions, FDI can be expected to influence environmental convergence along with other variables such as GDP per capita, industrial development, geographical proximity, or cultural and historical ties. Overall, these effects may vary depending on the type of partnership considered (North–North, North–South, South–North, and South–South).","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"28 1 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":"135635356","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}
Abstract This paper shows that trade in services is still at its infancy in Africa. Its growth started later than for other developed and developing economies and, so far, it involves mostly low‐skilled services. Disentangling the different sources of trade growth, we find that demand and supply determinants have been relatively stable during the period 2002–2016, while service diversification and trade policy are the main propellants. In particular, trade in goods liberalisation increased services trade as well due to the complementarities between the two. In terms of geographical and industrial involvement, services produced in Africa are able to reach farther destinations than goods, but they are concentrated on industries close to final demand, thus missing high‐skilled services that are more upstream, but represent higher value‐added inputs. Therefore, there is still plenty of scope to consider trade in services as a potential source of growth and development for African countries.
{"title":"Services' trade in Africa: Structure and growth","authors":"Andrea Ariu, Laura Ogliari","doi":"10.1111/twec.13499","DOIUrl":"https://doi.org/10.1111/twec.13499","url":null,"abstract":"Abstract This paper shows that trade in services is still at its infancy in Africa. Its growth started later than for other developed and developing economies and, so far, it involves mostly low‐skilled services. Disentangling the different sources of trade growth, we find that demand and supply determinants have been relatively stable during the period 2002–2016, while service diversification and trade policy are the main propellants. In particular, trade in goods liberalisation increased services trade as well due to the complementarities between the two. In terms of geographical and industrial involvement, services produced in Africa are able to reach farther destinations than goods, but they are concentrated on industries close to final demand, thus missing high‐skilled services that are more upstream, but represent higher value‐added inputs. Therefore, there is still plenty of scope to consider trade in services as a potential source of growth and development for African countries.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"44 10","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135819584","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}
Abstract The article analyses the interference of uncertainty on the effectiveness of fiscal policy. This issue is investigated through the lens of a Structural Vector Auto Regressive (SVAR) model for the United States and Brazil. Imposing government spending shocks, the models highlight a positive effect on economic activity. The results suggest Keynesian effects on consumption and GDP. To assess the effects of uncertainty, the models use two indices: the Economic Policy Uncertainty Index (EPU) and the World Uncertainty Index (WUI). The findings indicate that the fiscal effects are considerably less intense when uncertainty reaches high levels, consistent with the Real Options approach. The results suggest that agents are more cautious when the high‐uncertainty overshadows the outline of the economic scenario. In this sense, uncertainty disturbs agents' decisions and decreases consumption, investment and economic activity.
{"title":"Uncertainty and the effectiveness of fiscal policy in the United States and Brazil: SVAR approach","authors":"Eduardo de Sá Fortes Leitão Rodrigues","doi":"10.1111/twec.13524","DOIUrl":"https://doi.org/10.1111/twec.13524","url":null,"abstract":"Abstract The article analyses the interference of uncertainty on the effectiveness of fiscal policy. This issue is investigated through the lens of a Structural Vector Auto Regressive (SVAR) model for the United States and Brazil. Imposing government spending shocks, the models highlight a positive effect on economic activity. The results suggest Keynesian effects on consumption and GDP. To assess the effects of uncertainty, the models use two indices: the Economic Policy Uncertainty Index (EPU) and the World Uncertainty Index (WUI). The findings indicate that the fiscal effects are considerably less intense when uncertainty reaches high levels, consistent with the Real Options approach. The results suggest that agents are more cautious when the high‐uncertainty overshadows the outline of the economic scenario. In this sense, uncertainty disturbs agents' decisions and decreases consumption, investment and economic activity.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"43 17","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136103385","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}
Abstract Africa's participation in global value chains (GVCs) is not well documented compared with the developed world. Clearly understanding GVC participation levels is critical to enable evidence‐based policy. This paper uses two sources of data to assess Africa's GVC participation and empirically estimates determinants of GVC participation across the data sets. The analysis relies on databases based on customs‐level data (firm and country) and firm survey data from which measures of GVCs are constructed. We find that aggregate GVC data mask disparities, as Africa's proportion of firms participating in GVCs is comparable to other regions, but Africa's GVC trade is much lower. A common theme in the multi‐country empirical results is the positive relationship between political stability and GVC participation of African countries. For single‐country analyses, the consistent result is that FDI is positively associated with backward GVC participation, both at the firm level and country level of analysis. This highlights how much institutions and the need to attract FDI are relevant in promoting Africa's future engagements in GVCs. The consistency in GVC participation rates across the two data sets at the country level indicates their suitability in GVC studies in Africa and expanding their country coverage can enable policymakers to make informed decisions.
{"title":"An analysis of value chain trade in Africa","authors":"Angella Faith Montfaucon, Natnael Simachew Nigatu, Socrates Kraido Majune","doi":"10.1111/twec.13507","DOIUrl":"https://doi.org/10.1111/twec.13507","url":null,"abstract":"Abstract Africa's participation in global value chains (GVCs) is not well documented compared with the developed world. Clearly understanding GVC participation levels is critical to enable evidence‐based policy. This paper uses two sources of data to assess Africa's GVC participation and empirically estimates determinants of GVC participation across the data sets. The analysis relies on databases based on customs‐level data (firm and country) and firm survey data from which measures of GVCs are constructed. We find that aggregate GVC data mask disparities, as Africa's proportion of firms participating in GVCs is comparable to other regions, but Africa's GVC trade is much lower. A common theme in the multi‐country empirical results is the positive relationship between political stability and GVC participation of African countries. For single‐country analyses, the consistent result is that FDI is positively associated with backward GVC participation, both at the firm level and country level of analysis. This highlights how much institutions and the need to attract FDI are relevant in promoting Africa's future engagements in GVCs. The consistency in GVC participation rates across the two data sets at the country level indicates their suitability in GVC studies in Africa and expanding their country coverage can enable policymakers to make informed decisions.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"44 10","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135863093","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}
Abstract Studies of the determinants of cross‐border bank claims are based on the economic situations of the lending and borrowing countries—the traditional push/pull factors—but fail to take into account the situation of the international lending banks and the presence of their subsidiaries in emerging countries. They also fail to explain the huge decrease in cross‐border bank flows after the 2008 global financial crisis. In this paper, we analyse the determinants of cross‐border bank claims on a panel of 28 emerging countries and explicitly integrate banking determinants. Thus, we account for the financial situation of international lender banks and the existence of foreign locations in emerging countries as a potential pull stabilising factor. We show that the presence of foreign banks in emerging countries is clearly a factor of attraction for cross‐border bank claims. It remains when we explicitly take into account the 2008 crisis but to a lower extent and in favour of interbank loans. This may be proof of support from the international parent banks to their affiliates. Last, the financial situation of international banks, notably their liquidity and ability to respect prudential rules, also plays a role in their financing strategies in emerging countries.
{"title":"Drivers of cross‐border bank claims: The role of foreign‐owned banks in emerging countries","authors":"Sophie Brana, Dalila Chenaf‐Nicet, Delphine Lahet","doi":"10.1111/twec.13516","DOIUrl":"https://doi.org/10.1111/twec.13516","url":null,"abstract":"Abstract Studies of the determinants of cross‐border bank claims are based on the economic situations of the lending and borrowing countries—the traditional push/pull factors—but fail to take into account the situation of the international lending banks and the presence of their subsidiaries in emerging countries. They also fail to explain the huge decrease in cross‐border bank flows after the 2008 global financial crisis. In this paper, we analyse the determinants of cross‐border bank claims on a panel of 28 emerging countries and explicitly integrate banking determinants. Thus, we account for the financial situation of international lender banks and the existence of foreign locations in emerging countries as a potential pull stabilising factor. We show that the presence of foreign banks in emerging countries is clearly a factor of attraction for cross‐border bank claims. It remains when we explicitly take into account the 2008 crisis but to a lower extent and in favour of interbank loans. This may be proof of support from the international parent banks to their affiliates. Last, the financial situation of international banks, notably their liquidity and ability to respect prudential rules, also plays a role in their financing strategies in emerging countries.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"24 5","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136262315","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}
Abstract This paper examines Sub‐Saharan Africa's (SSA) role in global value chains (GVCs) through a new comprehensive country‐sector level database. It reaffirms known aspects: SSA's involvement in GVCs has grown but still trails other regions, especially in manufacturing. Typically, SSA is involved in upstream production stages, exporting commodities that are later processed and re‐exported by other countries. Only few SSA countries have integrated into manufacturing GVCs, importing inputs for export production. SSA also engages more in GVCs with external partners than with other SSA countries. Yet, new insights also emerge. SSA increasingly provides inputs for its own export products, though not for domestic sales. Additionally, African GVCs are shifting alliances; China and India are rising as sources for supply of inputs and final demand, overtaking Europe. However, the United States and Europe remain pivotal final destinations for African goods and re‐export hubs of African value added.
{"title":"Sub‐Saharan Africa's participation in global value chains: 1995–2021","authors":"Michele Mancini, Aaditya Mattoo, Daria Taglioni, Deborah Winkler","doi":"10.1111/twec.13497","DOIUrl":"https://doi.org/10.1111/twec.13497","url":null,"abstract":"Abstract This paper examines Sub‐Saharan Africa's (SSA) role in global value chains (GVCs) through a new comprehensive country‐sector level database. It reaffirms known aspects: SSA's involvement in GVCs has grown but still trails other regions, especially in manufacturing. Typically, SSA is involved in upstream production stages, exporting commodities that are later processed and re‐exported by other countries. Only few SSA countries have integrated into manufacturing GVCs, importing inputs for export production. SSA also engages more in GVCs with external partners than with other SSA countries. Yet, new insights also emerge. SSA increasingly provides inputs for its own export products, though not for domestic sales. Additionally, African GVCs are shifting alliances; China and India are rising as sources for supply of inputs and final demand, overtaking Europe. However, the United States and Europe remain pivotal final destinations for African goods and re‐export hubs of African value added.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"151 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136311888","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}
Abstract The 2011 reform of the Stability and Growth Pact (1996) strengthened the European Commission's monitoring of EU member states' public finance. Failure to comply with the 3% limit on public deficit triggers an audit. In this paper, we present a machine learning based forecasting model for compliance with the 3% limit. We use data from 2006 to 2018 (a turbulent period including the Global Financial Crisis and the Sovereign Debt Crisis) for the 28 EU member states. After identifying 8 features as predictors among 138 variables, forecasting is performed using a support vector machine (SVM) algorithm. The proposed model achieved a forecasting accuracy of nearly 92% and outperformed the logit model used as a benchmark.
{"title":"Forecasting stability and growth pact compliance using machine learning","authors":"Kea Baret, Amélie Barbier-Gauchard, Theophilos Papadimitriou","doi":"10.1111/twec.13518","DOIUrl":"https://doi.org/10.1111/twec.13518","url":null,"abstract":"Abstract The 2011 reform of the Stability and Growth Pact (1996) strengthened the European Commission's monitoring of EU member states' public finance. Failure to comply with the 3% limit on public deficit triggers an audit. In this paper, we present a machine learning based forecasting model for compliance with the 3% limit. We use data from 2006 to 2018 (a turbulent period including the Global Financial Crisis and the Sovereign Debt Crisis) for the 28 EU member states. After identifying 8 features as predictors among 138 variables, forecasting is performed using a support vector machine (SVM) algorithm. The proposed model achieved a forecasting accuracy of nearly 92% and outperformed the logit model used as a benchmark.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"8 8","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136377187","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}
Abstract This paper contributes to the literature on the economic impact of interstate conflicts by focusing on empirical analysis of the impact of interstate soft conflicts on bilateral trade. Interstate soft conflicts arising from the failure of diplomacy when a military operation seems too radical may act as a policy tool and have a negative impact on bilateral relations. The empirical approach is based on the use of balanced panel data with annual observations and a theory‐consistent structural gravity framework, augmented by a new measure of interstate soft conflict. The results of standard gravity estimators show that interstate soft conflicts have a sustained negative impact on bilateral trade, regardless of the control for omitted variables (presence of regional trade agreements, various types of sanctions, state acts, and militarised interstate disputes) and different model specifications.
{"title":"The impact of interstate soft conflicts on bilateral trade flows using structural gravity model","authors":"Tamar Taralashvili","doi":"10.1111/twec.13519","DOIUrl":"https://doi.org/10.1111/twec.13519","url":null,"abstract":"Abstract This paper contributes to the literature on the economic impact of interstate conflicts by focusing on empirical analysis of the impact of interstate soft conflicts on bilateral trade. Interstate soft conflicts arising from the failure of diplomacy when a military operation seems too radical may act as a policy tool and have a negative impact on bilateral relations. The empirical approach is based on the use of balanced panel data with annual observations and a theory‐consistent structural gravity framework, augmented by a new measure of interstate soft conflict. The results of standard gravity estimators show that interstate soft conflicts have a sustained negative impact on bilateral trade, regardless of the control for omitted variables (presence of regional trade agreements, various types of sanctions, state acts, and militarised interstate disputes) and different model specifications.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"29 21","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135016601","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}
Abstract This article examines how the Belt and Road Initiative (BRI) affects Cross‐Border M&As (CMAs) inflows to countries along the Belt and Road routes (BRI countries) from non‐BRI countries. We conduct a difference‐in‐differences estimation with a control group constructed through propensity score matching. We find that the BRI significantly reduces CMAs from non‐BRI countries to BRI countries. The results are robust to various concerns and specifications. We uncover two important mechanisms driving the results: the increased CMAs within BRI countries and the potential debt risks. We also find heterogeneous effects across countries.
{"title":"Does Belt and Road Initiative attract Cross‐Border M&As from other countries?","authors":"Chaoqun Zhan, Hanxi Wang, Chenxue Hou","doi":"10.1111/twec.13489","DOIUrl":"https://doi.org/10.1111/twec.13489","url":null,"abstract":"Abstract This article examines how the Belt and Road Initiative (BRI) affects Cross‐Border M&As (CMAs) inflows to countries along the Belt and Road routes (BRI countries) from non‐BRI countries. We conduct a difference‐in‐differences estimation with a control group constructed through propensity score matching. We find that the BRI significantly reduces CMAs from non‐BRI countries to BRI countries. The results are robust to various concerns and specifications. We uncover two important mechanisms driving the results: the increased CMAs within BRI countries and the potential debt risks. We also find heterogeneous effects across countries.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"70 4","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134902560","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}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：