Pub Date : 2023-08-23DOI: 10.18800/economia.202301.001
A. Delgado
This paper studies the potential association between two geographic indicators, distance and altitude, with the Multidimensional Poverty Index (MPI) for 1,874 district in Peru by using the National Census of 2017. We investigate whether higher altitude or longer distance is associated with higher MPI values. For this purpose, we use the distance of each district to three different potential spaces of reference. First, we use the shortest distance to the metropolitan area of Lima; second, the shortest distance to the capitals of coastal departments; third, and finally, the shortest distance to the sea. We obtain three relevant results. First, we find evidence that altitude is statistically significant and positive associated with variation of MPI among districts. Second, the distance with respect to the sea appears to be more relevant to explaining differences in MPI than the distance to the Metropolitan area or coastal departmental capitals. Finally, we find evidence of spatial externalities of MPI across districts which also seem to be stronger than the direct effect of altitude and distance.
{"title":"Altitude and Distance Relationships with the Multidimensional Poverty Index: The case of Peru","authors":"A. Delgado","doi":"10.18800/economia.202301.001","DOIUrl":"https://doi.org/10.18800/economia.202301.001","url":null,"abstract":"This paper studies the potential association between two geographic indicators, distance and altitude, with the Multidimensional Poverty Index (MPI) for 1,874 district in Peru by using the National Census of 2017. We investigate whether higher altitude or longer distance is associated with higher MPI values. For this purpose, we use the distance of each district to three different potential spaces of reference. First, we use the shortest distance to the metropolitan area of Lima; second, the shortest distance to the capitals of coastal departments; third, and finally, the shortest distance to the sea. We obtain three relevant results. First, we find evidence that altitude is statistically significant and positive associated with variation of MPI among districts. Second, the distance with respect to the sea appears to be more relevant to explaining differences in MPI than the distance to the Metropolitan area or coastal departmental capitals. Finally, we find evidence of spatial externalities of MPI across districts which also seem to be stronger than the direct effect of altitude and distance.","PeriodicalId":84551,"journal":{"name":"De economia","volume":"50 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80328459","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 : 2023-08-23DOI: 10.18800/economia.202301.002
Mario D. Tello, Cristina Tello-Trillo
This paper analyzes the impact of reducing output tariffs (i.e., domestic tariffs on import of final goods) and input tariffs (i.e., domestic tariffs on imports of intermediate goods) on total factor productivity growth of Peruvian manufacturing firms. Peru’s annual survey of manufacturing data from 2003–2017 is used to explore the reduction of tariffs during three preferential trade agreements: United States, China, and the European Union. Lower output tari˙s could decrease productivity by reducing firm’s market share or could increase productivity by inducing tougher import competition, while cheaper imported inputs can raise productivity via learning, variety, and quality effects. The results show that a decrease in output tariffs decreases Peruvian firms’ productivity growth for non-exporters (i.e., domestic firms producing goods that are also imported) while increasing productivity growth for exporters (i.e., domestic firms producing export goods). In contrast, a reduction in input tariffs increases firm productivity for all firms.
{"title":"Preferential Trade Agreements and Productivity: Evidence from Peru","authors":"Mario D. Tello, Cristina Tello-Trillo","doi":"10.18800/economia.202301.002","DOIUrl":"https://doi.org/10.18800/economia.202301.002","url":null,"abstract":"This paper analyzes the impact of reducing output tariffs (i.e., domestic tariffs on import of final goods) and input tariffs (i.e., domestic tariffs on imports of intermediate goods) on total factor productivity growth of Peruvian manufacturing firms. Peru’s annual survey of manufacturing data from 2003–2017 is used to explore the reduction of tariffs during three preferential trade agreements: United States, China, and the European Union. Lower output tari˙s could decrease productivity by reducing firm’s market share or could increase productivity by inducing tougher import competition, while cheaper imported inputs can raise productivity via learning, variety, and quality effects. The results show that a decrease in output tariffs decreases Peruvian firms’ productivity growth for non-exporters (i.e., domestic firms producing goods that are also imported) while increasing productivity growth for exporters (i.e., domestic firms producing export goods). In contrast, a reduction in input tariffs increases firm productivity for all firms.","PeriodicalId":84551,"journal":{"name":"De economia","volume":"258 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89186446","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 : 2023-08-23DOI: 10.18800/economia.202301.004
Thomas M. Fullerton Jr., Daniel J. Pastor, Michael Pokojovy, Andrew T. Yurachek
Research examining small commercial and industrial electricity usage patterns have historically received less attention than residential electricity consumption patterns. This study examines electricity as an input to small firm commercial and industrial (CIS) production in Las Cruces, the second largest metropolitan economy in the state of New Mexico, using annual frequency data from 1978 to 2018. Those data include labor, per capita personal income, price measures for electricity and natural gas, and weather variables. The long-run and short-run elasticities of the data are then estimated using an autoregressive distributed lag model (ARDL). In the long-run, the CIS derived-demand curve is found to be upward sloping, and Las Cruces CIS customers use natural gas as a complementary input. Real per capita income is also found to have a positive impact in the long-run, while weather impacts are found to be ambiguous. In the short-run, the Las Cruces CIS derived-demand curve is downward sloping, CIS customers use natural gas as a substitute factor, and weather extremes are found to be positively correlated with small firm electricity usage.
{"title":"Small Firm Electricity Demand in Las Cruces, New Mexico, USA","authors":"Thomas M. Fullerton Jr., Daniel J. Pastor, Michael Pokojovy, Andrew T. Yurachek","doi":"10.18800/economia.202301.004","DOIUrl":"https://doi.org/10.18800/economia.202301.004","url":null,"abstract":"Research examining small commercial and industrial electricity usage patterns have historically received less attention than residential electricity consumption patterns. This study examines electricity as an input to small firm commercial and industrial (CIS) production in Las Cruces, the second largest metropolitan economy in the state of New Mexico, using annual frequency data from 1978 to 2018. Those data include labor, per capita personal income, price measures for electricity and natural gas, and weather variables. The long-run and short-run elasticities of the data are then estimated using an autoregressive distributed lag model (ARDL). In the long-run, the CIS derived-demand curve is found to be upward sloping, and Las Cruces CIS customers use natural gas as a complementary input. Real per capita income is also found to have a positive impact in the long-run, while weather impacts are found to be ambiguous. In the short-run, the Las Cruces CIS derived-demand curve is downward sloping, CIS customers use natural gas as a substitute factor, and weather extremes are found to be positively correlated with small firm electricity usage.","PeriodicalId":84551,"journal":{"name":"De economia","volume":"58 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86088199","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 : 2023-08-22DOI: 10.1108/econ-11-2022-0163
André M. Marques
PurposeThis paper aims to test three hypotheses in city growth literature documenting the poverty reduction observed in Brazil and exploring a rich spatial dataset for 5,564 Brazilian cities observed between 1991 and 2010. The large sample and the author's improved econometric methods allows one to better understand and measure how important income growth is for poverty reduction, the patterns of agglomeration and population growth in all Brazilian cities.Design/methodology/approachThe author identifies literature gaps and use a sizeable spatial dataset for 5,564 Brazilian cities observed in 1991, 2000 and 2010 applying instrumental variables methods. The bias-corrected accelerated bootstrap percentile interval supports the author's point estimates.FindingsThis manuscript finds that Brazilian data for cities does not support Gibrat's law, raising the scope for urban planning and associated policies. Second, economic growth on a sustainable basis is still a vital source of poverty reduction (The author estimates the poverty elasticity at four percentage points). Lastly, agglomeration effects positively affect the city's productivity, while negative externalities underlie the city's development patterns.Originality/valueData for cities in Brazil possess unique characteristics such as spatial autocorrelation and endogeneity. Applying proper methods to find more reliable answers to the above three questions is a desirable procedure that must be encouraged. As the author points out in the manuscript, dealing with endogenous regressors in regional economics is still a developing matter that regional scientists could more generally apply to many regional issues.
{"title":"Poverty, population growth and agglomeration effects in all Brazil cities","authors":"André M. Marques","doi":"10.1108/econ-11-2022-0163","DOIUrl":"https://doi.org/10.1108/econ-11-2022-0163","url":null,"abstract":"PurposeThis paper aims to test three hypotheses in city growth literature documenting the poverty reduction observed in Brazil and exploring a rich spatial dataset for 5,564 Brazilian cities observed between 1991 and 2010. The large sample and the author's improved econometric methods allows one to better understand and measure how important income growth is for poverty reduction, the patterns of agglomeration and population growth in all Brazilian cities.Design/methodology/approachThe author identifies literature gaps and use a sizeable spatial dataset for 5,564 Brazilian cities observed in 1991, 2000 and 2010 applying instrumental variables methods. The bias-corrected accelerated bootstrap percentile interval supports the author's point estimates.FindingsThis manuscript finds that Brazilian data for cities does not support Gibrat's law, raising the scope for urban planning and associated policies. Second, economic growth on a sustainable basis is still a vital source of poverty reduction (The author estimates the poverty elasticity at four percentage points). Lastly, agglomeration effects positively affect the city's productivity, while negative externalities underlie the city's development patterns.Originality/valueData for cities in Brazil possess unique characteristics such as spatial autocorrelation and endogeneity. Applying proper methods to find more reliable answers to the above three questions is a desirable procedure that must be encouraged. As the author points out in the manuscript, dealing with endogenous regressors in regional economics is still a developing matter that regional scientists could more generally apply to many regional issues.","PeriodicalId":84551,"journal":{"name":"De economia","volume":"5 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-08-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73750921","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 : 2023-08-22DOI: 10.1108/econ-09-2022-0131
M. A. Afridi, M. Tahir
PurposeThis paper investigates the factors crucial for small and medium enterprises (SMEs) in establishing business relationships with banks in Pakistan.Design/methodology/approachTo investigate how SMEs select banking relationships using criteria, such as decision factors, decision-makers, and decision processes, a comprehensive literature review was used to classify SMEs' decision factors for bank selection. A survey questionnaire was distributed to 200 SMEs, randomly selected from the Small and Medium Enterprise Development Authority database in Pakistan. Probit/Tobit model is estimated to explain the behavior of SMEs.FindingsThe results reveal that SMEs consider a bank's Reputation, Price, and Location essential while establishing bank relationships. SMEs tend to terminate relationships with banks when the Price and Location of the bank are considered essential factors in the relationship with the banks. Price and Location are necessary for SMEs to reduce banking relationships. The SMEs also tend to reduce if they get attractive offers, or the SMEs are recommended to make a banking relationship. This study also provides intuitions for bank policymakers to design policies to retain SME customers and attract new business relationships.Practical implicationsThe research emphasizes the importance of competitive and transparent pricing strategies in designing products for SMEs. Banks must prioritize their Reputation and credibility to attract and retain relationships with SMEs.Originality/valueThe study attempts to provide evidence on the SME-Bank relationship focusing on the factors that are crucial for SMEs to decide while establishing business relationships with banks. Also, most of the related literature focuses on developed countries; this research adds to the literature on SMEs' behavior, particularly in a developing country's context.
{"title":"What drives small and medium enterprises to establish and terminate banking relationships?","authors":"M. A. Afridi, M. Tahir","doi":"10.1108/econ-09-2022-0131","DOIUrl":"https://doi.org/10.1108/econ-09-2022-0131","url":null,"abstract":"PurposeThis paper investigates the factors crucial for small and medium enterprises (SMEs) in establishing business relationships with banks in Pakistan.Design/methodology/approachTo investigate how SMEs select banking relationships using criteria, such as decision factors, decision-makers, and decision processes, a comprehensive literature review was used to classify SMEs' decision factors for bank selection. A survey questionnaire was distributed to 200 SMEs, randomly selected from the Small and Medium Enterprise Development Authority database in Pakistan. Probit/Tobit model is estimated to explain the behavior of SMEs.FindingsThe results reveal that SMEs consider a bank's Reputation, Price, and Location essential while establishing bank relationships. SMEs tend to terminate relationships with banks when the Price and Location of the bank are considered essential factors in the relationship with the banks. Price and Location are necessary for SMEs to reduce banking relationships. The SMEs also tend to reduce if they get attractive offers, or the SMEs are recommended to make a banking relationship. This study also provides intuitions for bank policymakers to design policies to retain SME customers and attract new business relationships.Practical implicationsThe research emphasizes the importance of competitive and transparent pricing strategies in designing products for SMEs. Banks must prioritize their Reputation and credibility to attract and retain relationships with SMEs.Originality/valueThe study attempts to provide evidence on the SME-Bank relationship focusing on the factors that are crucial for SMEs to decide while establishing business relationships with banks. Also, most of the related literature focuses on developed countries; this research adds to the literature on SMEs' behavior, particularly in a developing country's context.","PeriodicalId":84551,"journal":{"name":"De economia","volume":"31 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-08-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82311442","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 : 2023-07-28DOI: 10.1108/econ-06-2022-0046
Onur Seker
PurposeThis study aims to analyze the contagious effects of economic policy uncertainties in the USA on the economies of its important trading partners, such as Japan, Canada, Mexico and the Eurozone.Design/methodology/approachIn the study using the uncertainty index created by Baker et al. (2016), the interaction between variables was analyzed with structural VAR (SVAR) models.FindingsAccording to the results obtained from the analysis, economic policy uncertainties in the USA had significant effects on the economies of its high-volume trading partners. The internal debt crisis experienced in the Eurozone after the 2008 crisis caused the European Central Bank to respond to the economic policy uncertainties in the USA with contractionary monetary policies, unlike other countries. In addition to these results, Mexico, which has a more fragile economic structure than other countries in the analysis, was more impacted by increasing uncertainties, as expected.Originality/valueThe present study aimed to bring a new perspective to the literature by evaluating the contagiousness of local uncertainty in the globalizing world and the monetary policies implemented as a precaution against this situation on an empirical plane.
{"title":"The contagious effect of economic policy uncertainty in the post-crisis period","authors":"Onur Seker","doi":"10.1108/econ-06-2022-0046","DOIUrl":"https://doi.org/10.1108/econ-06-2022-0046","url":null,"abstract":"PurposeThis study aims to analyze the contagious effects of economic policy uncertainties in the USA on the economies of its important trading partners, such as Japan, Canada, Mexico and the Eurozone.Design/methodology/approachIn the study using the uncertainty index created by Baker et al. (2016), the interaction between variables was analyzed with structural VAR (SVAR) models.FindingsAccording to the results obtained from the analysis, economic policy uncertainties in the USA had significant effects on the economies of its high-volume trading partners. The internal debt crisis experienced in the Eurozone after the 2008 crisis caused the European Central Bank to respond to the economic policy uncertainties in the USA with contractionary monetary policies, unlike other countries. In addition to these results, Mexico, which has a more fragile economic structure than other countries in the analysis, was more impacted by increasing uncertainties, as expected.Originality/valueThe present study aimed to bring a new perspective to the literature by evaluating the contagiousness of local uncertainty in the globalizing world and the monetary policies implemented as a precaution against this situation on an empirical plane.","PeriodicalId":84551,"journal":{"name":"De economia","volume":"19 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-07-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89781234","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 : 2023-07-28DOI: 10.1108/econ-09-2022-0132
Sergio Almeida
PurposeThis study aims to examine the effects of prior small-scale changes to wealth on subsequent risky choices.Design/methodology/approachThe paper opted for a laboratory experiment in which subjects perform two sequences of risky tasks. In between these two sets, the author transfers money for real for a randomly selected half of the subjects. Data on choices before and after the transfer of money are used to estimate risk attitudes and analyze whether the transfer of money affected attitudes to risk.FindingsThe author finds that the money gain does not change subjects' risk preferences – neither in a within- nor in a between-subject design. This suggests that individuals' risky choices are consistent with their constant absolute (CARA) risk aversion preferences, a result that supports a key assumption in recent literature on the calibration critique of decision theories and the view that individuals engage in narrow framing.Research limitations/implicationsBecause of the relatively small transfer of money, the research results may lack generalizability.Practical implicationsThe paper includes implications for the reference-dependent and other theories that explain how prior outcomes affect risk-taking behavior in sequential problems.Social implications The results are relevant to the research community studying risk-taking behavior as the results shed new light on a well-known result put forward by a seminal paper by Thaler.Originality/valueThis paper fills in an identified gap in the literature which is the need to test the house-money effect in a more realistic setting (over repeated risk-elicitation tasks, with money given outside the lotteries and in a within-subject design).
{"title":"The effect of small-scale changes in wealth on risk attitudes: an experimental study","authors":"Sergio Almeida","doi":"10.1108/econ-09-2022-0132","DOIUrl":"https://doi.org/10.1108/econ-09-2022-0132","url":null,"abstract":"PurposeThis study aims to examine the effects of prior small-scale changes to wealth on subsequent risky choices.Design/methodology/approachThe paper opted for a laboratory experiment in which subjects perform two sequences of risky tasks. In between these two sets, the author transfers money for real for a randomly selected half of the subjects. Data on choices before and after the transfer of money are used to estimate risk attitudes and analyze whether the transfer of money affected attitudes to risk.FindingsThe author finds that the money gain does not change subjects' risk preferences – neither in a within- nor in a between-subject design. This suggests that individuals' risky choices are consistent with their constant absolute (CARA) risk aversion preferences, a result that supports a key assumption in recent literature on the calibration critique of decision theories and the view that individuals engage in narrow framing.Research limitations/implicationsBecause of the relatively small transfer of money, the research results may lack generalizability.Practical implicationsThe paper includes implications for the reference-dependent and other theories that explain how prior outcomes affect risk-taking behavior in sequential problems.Social implications The results are relevant to the research community studying risk-taking behavior as the results shed new light on a well-known result put forward by a seminal paper by Thaler.Originality/valueThis paper fills in an identified gap in the literature which is the need to test the house-money effect in a more realistic setting (over repeated risk-elicitation tasks, with money given outside the lotteries and in a within-subject design).","PeriodicalId":84551,"journal":{"name":"De economia","volume":"72 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-07-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80770610","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 : 2023-07-21DOI: 10.1108/econ-06-2022-0052
Ana Carolina Borges Marques Ribeiro, S. H. Tai
PurposeThis study analyzes the role of migrant networks in the migration flows in relation to the educational level of the migrants and economic growth of the states of origin and destination in Brazil.Design/methodology/approachFixed effects estimator applied to microdata.FindingsThe results show migrant networks have a significant and positive impact on migration flows of the different educational levels. The economic growth in the destination state accentuates this effect, while the economic growth in the origin state has distinct impacts according to the educational level of the new migrant.Originality/valueThe authors investigate the importance of migrant networks in the internal immigration within a developing country with large internal movement of people. In Brazil, the socio-economic condition of the population varies considerably in relation to its geography, which explains the country’s large internal migration flows.
{"title":"Migrant networks, regional development and internal migration flows in Brazil","authors":"Ana Carolina Borges Marques Ribeiro, S. H. Tai","doi":"10.1108/econ-06-2022-0052","DOIUrl":"https://doi.org/10.1108/econ-06-2022-0052","url":null,"abstract":"PurposeThis study analyzes the role of migrant networks in the migration flows in relation to the educational level of the migrants and economic growth of the states of origin and destination in Brazil.Design/methodology/approachFixed effects estimator applied to microdata.FindingsThe results show migrant networks have a significant and positive impact on migration flows of the different educational levels. The economic growth in the destination state accentuates this effect, while the economic growth in the origin state has distinct impacts according to the educational level of the new migrant.Originality/valueThe authors investigate the importance of migrant networks in the internal immigration within a developing country with large internal movement of people. In Brazil, the socio-economic condition of the population varies considerably in relation to its geography, which explains the country’s large internal migration flows.","PeriodicalId":84551,"journal":{"name":"De economia","volume":"7 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-07-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89429693","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 : 2023-06-06DOI: 10.1108/econ-12-2022-0189
E. Reis
PurposeThe purpose is to market a reinterpretation of Brazilian economic history highlighting the importance of non-tradable goods to understand major historical developments such as the lack of industrialization in the mining boom; the rise and contribution of industries to development in the early 20th century; indexation as hyperinflation in the late 20th century; growth and cycles in the early 21st century.Design/methodology/approachSection 2 introduces analytical perspectives on the relationship between non-tradables, transport costs and external shocks. Section 3 presents a historical overview of the gold and coffee cycles in the Brazilian economy, which highlights the crucial role played by transport costs in the genesis of industrialization. Thus, in a more precise way, industrialization was not an import substitution process but the substitution of non-tradables by the domestic tradable manufactures.FindingsSection 4 shows that Brazilian statistical records and historiography disregard this characterization and, to that extent, underestimate economic growth in the primary export phase (1872–1920) and overestimate growth rates in the industrialization period (1920–1940). Section 5 shifts to the end of the 20th century to analyze the relationship between non-tradables, indexation and hyperinflation. Section 6 concludes with a brief discussion of the role played by the terms of trade and non-tradables in the unfolding of the 2014 economic crisis.Originality/valueDistance from international markets and a continental geographic size made transport costs in Brazil historically prohibitive: the relevance of non-tradables in the Brazilian economic history. While the theme is not new, it seldom received proper attention in the historiography.
{"title":"Non-tradables in Brazilian economic history","authors":"E. Reis","doi":"10.1108/econ-12-2022-0189","DOIUrl":"https://doi.org/10.1108/econ-12-2022-0189","url":null,"abstract":"PurposeThe purpose is to market a reinterpretation of Brazilian economic history highlighting the importance of non-tradable goods to understand major historical developments such as the lack of industrialization in the mining boom; the rise and contribution of industries to development in the early 20th century; indexation as hyperinflation in the late 20th century; growth and cycles in the early 21st century.Design/methodology/approachSection 2 introduces analytical perspectives on the relationship between non-tradables, transport costs and external shocks. Section 3 presents a historical overview of the gold and coffee cycles in the Brazilian economy, which highlights the crucial role played by transport costs in the genesis of industrialization. Thus, in a more precise way, industrialization was not an import substitution process but the substitution of non-tradables by the domestic tradable manufactures.FindingsSection 4 shows that Brazilian statistical records and historiography disregard this characterization and, to that extent, underestimate economic growth in the primary export phase (1872–1920) and overestimate growth rates in the industrialization period (1920–1940). Section 5 shifts to the end of the 20th century to analyze the relationship between non-tradables, indexation and hyperinflation. Section 6 concludes with a brief discussion of the role played by the terms of trade and non-tradables in the unfolding of the 2014 economic crisis.Originality/valueDistance from international markets and a continental geographic size made transport costs in Brazil historically prohibitive: the relevance of non-tradables in the Brazilian economic history. While the theme is not new, it seldom received proper attention in the historiography.","PeriodicalId":84551,"journal":{"name":"De economia","volume":"18 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-06-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"72734758","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 : 2023-05-19DOI: 10.1108/econ-07-2022-0091
Dhyani Mehta, M. Mallikarjun
PurposeThis study aims to examine the impact of fiscal deficit, exchange rate and trade openness on current account deficit (CAD). The study tried to empirically investigate the ‘twin deficits hypothesis’ and ‘compensation hypothesis’ in the Indian context.Design/methodology/approachAutoregressive distributed lagARDL) bound test approach was used by taking annual time series data from 1978 to 2021. The estimates confirm a significant long-run and short-run relationship between dependent variables, i.e. CAD and independent variables such as the fiscal deficit, exchange rate and trade openness.FindingsThe results show that positive shocks of all explanatory variables significantly affect the CAD. CAD and fiscal deficit are significantly associated, as the coefficient of fiscal deficit is positive and significant. The study also found that exchange rate and trade openness significantly affect the CAD. The coefficients of exchange rate and trade openness are positive and significant. The findings show that an increase in CADs results from liberal trade policies that help domestic industries grow their trade and expansionary fiscal policy, leading to a higher fiscal deficit. The negative and significant error correction term suggests that short-run disequilibrium converges to long-run equilibrium at a speed of 19.2%. The findings validate the ‘twin deficits hypothesis’ and ‘compensation hypothesis’ in the Indian context.Practical implicationsIt can be inferred from the study that liberal policy to promote economic growth and trade openness should be designed and promoted judiciously. An excessive liberalised approach may impact other macroeconomic variables such as current account balances. Integrating the domestic market with global markets poses a big challenge for countries like India that aspire to penetrate global markets. Furthermore, the Indian policy makers should rigorously work and promote the policies such as Fiscal Responsibility and Budget Management (FRBM) as reduction in fiscal deficits, trade imbalances will also be reduced.Originality/valueThis study contributes to the existing literature on ‘twin deficit’ and trade openness by giving new evidence on the trilemma between designing sustainable fiscal policy by spending wisely without imperilling the country's global presence and CAD.
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