Article

Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations

Authors:
To read the full-text of this research, you can request a copy directly from the authors.

No full-text available

Request Full-text Paper PDF

To read the full-text of this research,
you can request a copy directly from the authors.

... This can only be taken care by the dynamic panel. The dynamic panel that we apply in this method is the linear dynamic panel data model introduced by Arrelano and Bond (1991) and Arrelano and Bover (1995) /Blundell and Bond (1998). This is two-step system generalised methods of moments (GMM). ...
... Specifically, the study applied Driscoll and Kraay (1998a, b) and Panel-Corrected Standard Approach (PCSE) for the static panel models. As for dynamic panel models, the study employed Arrelano and Bond (1991) and Arrelano and Bover (1995) /Blundell and Bond (1998) system generalised methods of moments (GMM). These will be further explained in greater details in the "Methodology" section. ...
... Despite the significant improvements offered by static panel techniques, concern has been expressed by Enowbi and Kupukile (2012) that the lagged dependent variable is correlated with the error term even if the disturbances are not autocorrelated, thereby causing endogeneity issue; therefore, this limitation is solved by applying dynamic panel data (DPD) estimators in the form of Arrelano and Bond (1991) and Arrelano and Bover (1995) /Blundell and Bond (1998). The system generalised method of moment (GMM) provides robust results in the presence of endogeneity problem. ...
Article
Full-text available
The loss of biodiversity has profound implications for nature’s contributions to people and their health. This study intends to examine the factors responsible for biodiversity loss as well as the coping mechanisms to address this crisis in the context of 35 European economies covering the 2009–2018 period. The study utilises both the static and dynamic panel estimation techniques to examine the above issue. Specifically, the study applied Driscoll and Kraay (1998a), Driscoll and Kraay (Rev Econ Stat 80:549-560, 1998b) and Panel Corrected Standard Approach (PCSE) for the static panel models. As for dynamic panel models, the study employs linear dynamic panel model by Arrelano and Bond (Rev Econ Stud 58:277-297, 1991) and Arrelano and Bover (J Econom 68:29-51, 1995)/Blundell and Bond (J Econom 87:115-143, 1998) system generalised methods of moments (GMM). Morandeover for robustness purposes, fixed and random effect models are also applied. The findings indicate that renewable energy use increases biodiversity crisis whereas organic farming is beneficial for biodiversity preservation in Europe. Corruption and gender gap were found to increase the biodiversity crisis. The evidence also suggests a positive and significant effect of forest area, e-governance and social progress on biodiversity. Finally, the study provides insightful implications for stakeholders and practitioners associated with energy and biodiversity conservation in Europe.
... In such conditions, GMM is the most appropriate technique. GMM was developed by Arellano and Bond (1991); they related the performance of difference GMM, Ordinary Least Square (OLS), and Within Group (WG) estimator and found that Difference GMM produced the minor bias and variance. Another inadequacy of difference GMM is that the level variables with their lags are used as instruments considered weak for the first differences equation, leading to biased and inconsistent coefficients (Blundell & Bond, 1998). ...
... Another inadequacy of difference GMM is that the level variables with their lags are used as instruments considered weak for the first differences equation, leading to biased and inconsistent coefficients (Blundell & Bond, 1998). To handle this problem, it is suggested to use system GMM to combine the level equation and first difference equation (Arellano & Bond, 1991;Blundell & Bond, 1998). It is claimed that System GMM (SGMM) is superior to difference GMM because this permits for correction of measurement error in the other variables. ...
... Overall instrument validity is tested through the Sargan test of over-identifying restriction. To check serial correlation in error terms, Arellano and Bond (1991) tested AR1 and AR2. ...
Article
Full-text available
This paper explores the effect of human capital and technology on economic growth in Asian countries while considering economic development. The paper expands the Solow Growth model by further incorporating the import of machinery and equipment reflecting total factor productivity. Panel data for 30 Asian countries has been used over 1995-2015. Due to the endogeneity problem in human capital and other variables, the System Generalized Method of Moment (GMM) is used to address this problem. Empirical results reveal that human capital and technology have increased economic growth in the total sample of Asian countries. Furthermore, the sample has been disaggregated into high-income (HI) and low-income (LI) Asian countries. Our findings determine that human capital and technology are reflecting a positive and statistically significant role in enhancing economic growth in both samples of countries. However, the magnitude of the impact is high in HI Asian countries relative to LI Asian countries, respectively. When the import of machinery and equipment are replaced with patents, a positive and insignificant results are obtained for LI countries because these countries have lacked legal systems, but a positive and statistically significant relationship is observed for HI Asian countries.
... The Generalized Method of Moments (GMM), which produce consistent parameter estimates for a finite number of time intervals, T, and a large cross-sectional dimension, N, is proposed for the estimation of dynamic panel data (Blundell and Bond, 1998;Bond, 1991;Bond and Hoeffler, 2001). There are two methods namely Difference (DIFF)-GMM and System (SYS)-GMM. ...
... The validity of the GMM estimator depends on the reliability of the instruments. As argued by Arellano and Bond (1991) and Blundell and Bond (1998), two specification tests are required. First, the Sargan / Hansen test of over-identifying restrictions that test the instrument's overall validity. ...
Article
Full-text available
The study reviews growth-development theories in a clear and explicit attempt to reassess the dynamism of the sectoral relationship and see if this relationship is empirically plausible in western Africa. This study examines the relationship between the agricultural and non-agricultural sectors by modeling the dynamic link between these sectors. The result of the study reveals a dynamic and positive sectoral relationship, justifying the necessary growth path for these economies. Variables such as unemployment, Trade openness, expenditure on education, contribute largely and positively to sectoral growth in West Africa. Öz Çalışma sektörel ilişkinin dinamizmini yeniden değerlendirmek ve bu ilişkinin Afrika'nın batı kesiminde ampirik olarak makul olup olmadığını görmek için açık ve belirgin bir girişimle büyüme-kalkınma teorilerini gözden geçirmektedir. Batı Afrika ülkeleri için ülkeler arası verilerden yararlanan bu çalışma, tarımsal ve tarım dışı sektör arasındaki ilişkiyi, bu sektörler arasındaki dinamik bağlantıyı modelleyerek incelemektedir. Çalışma sonucunda elde edilen sonuç, dinamik ve pozitif bir sektörel ilişkiyi ortaya koyarak bu ekonomiler için gerekli büyüme yolunu ortaya koymaktadır. İşsizlik, ticarete açıklık, eğitim harcamaları vb. değişkenler sektörel büyümeye büyük ve olumlu katkı sağlamaktadır.
... The study employs the Generalized Method of Moments (GMM) for estimation. Arellano and Bover (1995) and Blundell and Bond (1998) developed assumptions under which the study can use the GMM estimator to remove the problem of weak instruments (Bond 1991;Bover 1995). ...
... Other models (such as pooled OLS, random and fixed effect) are weak when the lagged variables are correlated with the error term even if the study assumes that the disturbances are not to-correlated (Babajide Wintoki 2012). To reduce this problem, the study will employ the Arellano-Bond/Blundell-Bond estimator, which addresses the problem of omitted variable bias, endogeneity, and unit root effects in the choice of the instruments (Bond 1991;Bond 1998). ...
Article
Full-text available
Youth unemployment is a problem in Africa such that young people face almost double the unemployment rate as adults. With the booming population on the rise, youth unemployment can turn into a major catastrophe in the continent if not addressed. This study presents empirical evidence on how income inequality accelerates the problem. The study uses panel data from 42 African countries spanning 29 years from 1991 to 2020. The dependent variable is youth unemployment, and the independent variable is income inequality. The control variables are gross domestic product (GDP) per capita, population growth, political stability, foreign direct investment, gross capital formation, and political stability. The study employs the Generalized Method of Moment (GMM) model for estimations. The results imply that income inequality positively impacts African youth unemployment, which varies across different income levels. Therefore, measures must be formulated to combat income inequality, such as increasing productivity among small-scale farmers, robust social protection programs, minimum wages, and better access to financial services for young people on the continent.
... A recent paper by Khalaf et al. (2021) studies the dynamic panel data model with MIDAS. They extend the GMM methods of Anderson and Hsiao (1982) and Arellano and Bond (1991) to dynamic panel models with MIDAS. The static model studied in our paper can been seen as a special case of the dynamic model in Khalaf et al. (2021) where the coefficient of the lagged dependent variable is set to zero. ...
Article
Standard panel models usually assume that data are available at the same frequency. Occasionally, researchers might work with variables sampled at different frequencies. A common practice is to aggregate all variables to the same frequency by an equal weighting scheme. We show that such a simple aggregation scheme results in biases for common estimators. We propose a data‐driven method to determine weights for aggregation. We further demonstrate that, in contrast with single‐frequency panel models, the Mundlak device and the Chamberlain's approach lead to different estimators for panels with mixed sampling frequencies. The proposed estimators have satisfying finite sample performances in various simulation designs. As an empirical illustration, we apply the new method to the estimation of the effects of temperature fluctuations on economic growth. The empirical evidence shows that the temperature shocks mainly work through the level effect instead of the growth effect for poor countries.
... It is crucial to guarantee two essential requirements for the consistency of System GMM estimations (Bond, 1991): ...
Article
Full-text available
This study analyses and compares the behavior of the gold-backed, conventional cryptocurrency, and gold markets capable of detecting the existence of herding and deducing the efficiency degree. In addition, this empirical work tried to examine the COVID-19 pandemic's influence on both cryptocurrency performances. This work developed a new method that discloses herding biases using persistence and efficiency metrics. Besides, this paper investigated the nonlinear dynamic properties of the gold-backed, conventional cryptocurrencies and Gold by estimating the Multifractal Detrended Fluctuation Analysis (MFDFA). It also assessed the inefficiency of these markets through an efficiency index (IEI) and tested the effect of COVID-19 on their dynamics. The findings of this investigation indicate that the gold-backed cryptocurrency (X8X) is the most efficient market in the long-term trading market. However, the conventional cryptocurrency market (Bitcoin) is the most efficient on the short trade horizon. Besides, gold-backed cryptocurrency markets present a smaller level of herding behavior than conventional cryptocurrencies on tall scales. Nevertheless, we noted the positive and negative effects of the pandemic on each cryptocurrency market dynamics. To the best of the authors' knowledge, this study is the first investigation that uses multifractal analysis to quantify the impact of the COVID-19 spread on gold-backed cryptocurrencies and detects the presence of herding behavior.
... We use a typical balanced panel data model. The use of panel data enables us to process large numbers of cross-sectional units for a few periods while it reduces collinearity among the explanatory variables, enhancing the efficiency of econometric estimates (Arrellano and Bond, 1991). At the same time, panel data consider the heterogeneity that characterizes firms, something crucial for our study as our main interest is to examine the existence of firm and industry effects regarding the capital structure across industries. ...
Preprint
Full-text available
Following recent literature on the specific field of industry effects on capital structure determination (Kumar et al., 2017; Daskalakis et al., 2022), the main purpose of this paper is to reintroduce the importance of industry effects in the determination of financial leverage, focusing on SMEs. We investigate whether SMEs capital structure is determined differently across different industries. We construct a three-stage econometric model, built around industry differentiations in capital structure determination, aiming to investigate the following two aspects: a) the relationship between the debt ratio and specific capital structure determinants, taking the industry factor under consideration, b) any potential differentiation in capital structure determinants across the selected industries. We not only show that the different capital structure determinants affect financial leverage in different ways across industries (different signs), but we also show that the level of intensity is different (statistically different coefficients) even in case the signs are the same.
... Specifically, the first difference transformation is used to resolve the problem of Nickell bias due to the product-specific fixed effect ζ i (Ullah et al., 2018). To ensure robust statistical inference, we conducted the Arellano-Bond test (Bond, 1991) and the Hansen test (Hansen, 1982) to eliminate the problems of higherorder autocorrelation and over-identification, respectively. The results of the Arellano-Bond test and the Hansen test show that the statistical indicators of these two tests are not significant, which indicates the robust statistical inference. ...
Article
In recent years, there has been an increase in online review manipulation on the platforms of electronic commerce. Previous studies clarify the benefits and harms of online review manipulation for firms, and they provide mixed conclusions on the influence of online review manipulation. However, the effect of online review manipulation on product sales has not yet been thoroughly studied due to the covert nature of review manipulation. To fill this research gap, this paper examines the different effects of review manipulation in three dimensions: quantity manipulation, quality manipulation, and relation manipulation. Drawing on the Information Manipulation Theory, which reveals the manipulation behaviors of different dimensions, it is proposed that the influence of online review manipulation differs significantly among different information manipulation dimensions. The results of the empirical experiments show that the effect of review quantity manipulation on product sales exhibits an inverted U-shape. In addition, review quality manipulation positively affects product sales, but review relation manipulation exerts a negative effect. Moreover, the magnitude of the effect of review manipulation is contingent upon review manipulation duration. The findings shed light on the heterogeneous effect of review manipulation dimensions on product sales from an information manipulation perspective and suggest a need for improvement in online fraudulent review detection in the early stage of review manipulation.
... The link between the growth of Asian nations' stock markets and their reliance on energy sources may be explained empirically. According to the findings of Bond (1991), there is no correlation between stock market growth and sustainable energy use. The regression coefficients of Lv et al. (2021), meanwhile, show that financial market expansion stimulates the use of REC at lower quantiles, whereas the opposite is true at higher observed values of expenditure. ...
Article
Full-text available
There has been a steady decline in carbon dioxide emissions in the world’s 19 most industrialized nations even as GDP has increased. These nations’ efforts to reduce emissions of carbon dioxide, therefore, to reduction of CO2 and development of renewable energy are the objective of this research. With the years 1995–2019 as a point of reference, we have selected gross domestic product, GDP, RE, industrial upgrading, and import and export as our independent variables. A panel nonlinear autoregressive distributed lag (NARDL) method is utilized to investigate the links between carbon dioxide emission and these independent variables. For the purpose of determining the direction of causation, the panel heterogeneous causality test is used. RE and standards of export and import were shown to be contributing variables in the decrease of carbon dioxide emissions. The environmental Kuznets curve hypothesis was validated by the estimated findings. Increased carbon dioxide emissions are countered by the positive impulses of technological progress, such as R&D development spending and standards of import and export index. Industrial upgrading and emissions of carbon dioxide, gross domestic product and RE, and industrial upgrading and emissions of carbon dioxide, all have a bidirectional causal link. In particular, a one-way causality between gross domestic product and emissions of carbon dioxide, standards of imports and exports, and industrial upgrading, and industrial upgrading and standards of imports and exports is demonstrated. Following the results, policy suggestions are put out.
... In order to increase efficiency as compared to the original difference model advanced by Arellano and Bond (1991), Blundell and Bond (1998), instead of transforming the regressors, they transform (difference) the instruments to make them exogenous to the fixed effects. ...
Article
The purpose of this study is to test the relationship between local elections and local government budgets. Using dataset of all Macedonian municipalities for the period 2007-2015, this study examines whether the overall spending and the composition of local government expenditures are systematically manipulated just before elections. The results show that spending during the pre-election period shifts toward more desirable categories such as permanent and temporary employment, capital projects, and individual transfers and subsidies. Very few studies relate pre-electoral fiscal manipulation to clientelistic linkages. This paper fills the void by adding empirical evidence from a transitional democracy.
Article
Prior research has identified outward‐oriented policies as a far superior approach to achieving economic growth. Whilst trade openness determines economic growth in the short run, institutional quality is critical to long‐term viability. However, the direct and indirect effects of institutions have been understudied, particularly for the Brazil, Russia, India, China and South Africa. This study addresses this issue by estimating long‐run and short‐run elasticities using the system GMM and pooled mean group models and identifying its country‐specific impact using the fully modified ordinary least square model. According to the findings, trade and institutions are only short‐run complements of economic growth. In the long run, however, the lack of good governance limits the positive impact of trade openness.
The Arab Spring (AS) marked an unprecedented event in the Middle East and North Africa (MENA) region, and it generated political and economic uncertainties and triggered violent conflicts and political rifts. This paper empirically examines the short-run and long-run effects of the AS on foreign direct investment (FDI) inflows to the MENA region and to individual MENA countries. The empirical analysis is implemented through the generalized method of moments (GMM) estimator for dynamic panel models, using different empirical specifications. The benchmark results show that the AS has led to important reductions in FDI inflows to the MENA region. A more detailed empirical analysis reveals significant variations in the AS effects on FDI inflows across MENA countries and it underscores distinct patterns over different time periods. These findings imply that governments in the MENA region are required to maintain political stability, and to adopt distinctive policies that lessen the adverse implications of the AS and that set favorable conditions for FDI inflows in the post-COVID-19 pandemic era.
Article
This study empirically investigates the relationships between tariffs and non‐tariff measures before and after the global financial crisis (GFC). The panel analysis is based on traded products of 70 countries from 1997 to 2015. For developed countries, we find that tariffs and non‐tariff measures were complementary before the crisis, but they became substitutional afterward. We do not find such shift for developing countries. We also run the analysis by income levels and by types of products and observe differential effects of the GFC on the relationship between the two trade policies.
Article
Participation in global value chains (GVCs) has been proposed as a central means for emerging economies to develop and technologically upgrade. However, the effects of GVCs on income distribution in the global South remain underexplored. This article presents an econometric analysis of the determinants of the labour share in seven emerging economies for the period 1995–2014. Drawing on industry‐level data from global input‐output tables, the authors focus on how GVC participation — in particular offshoring of production from advanced to emerging economies — affects the labour share of different skill groups within manufacturing and service industries. They also estimate the effects of GVCs on productivity, real wages and the capital–value added ratio, to shed further light on the channels through which GVCs affect the labour share. In both industry groups, findings show that integration into GVCs with advanced economies has a negative effect on the labour share in emerging economies, particularly for medium‐skilled workers. In contrast, higher union density and government consumption spending have positive effects on the labour share. Thus, labour in emerging economies loses out relative to capital as production becomes more integrated across borders.
Article
In line with the resource curse literature, this paper examines the effect of oil dependency on the disparities in access to electricity between urban and rural areas in Africa, conditional on the quality of political institutions. Based on data from 36 African countries over the period 2000–2017, our investigation suggests that oil rents (% of GDP) increase urban–rural disparities in access to electricity. However, the quality of institutions shapes the effect of oil dependency on these disparities. Specifically, a 10% increase in the institutional quality score reduces the adverse effects of oil rent on electricity access disparity by around 19%, and the negative impact of oil dependency on urban–rural disparities is reversed when institutional quality reaches a score of 52% on a scale from 0 to 100. The robustness tests support these results and call for strengthening the quality of institutions to overcome the resource curse in Africa.
Article
Trade liberalization for environmental goods (EG) could pave the way for a “win‐win” scenario for both the economy and the environment. This study examines the impact of environmental good exports on the comprehensive economic development and environmental protection index, green total factor productivity (GTFP), using a Chinese city‐level panel dataset from 2003 to 2015. Overall, our findings indicate that EG exports are detrimental to China's green development. Particularly, traditional EGs intended to address environmental concerns significantly impede GTFP, whereas environmentally preferable products with cleaner product life cycles have no such effect. Furthermore, EG exports do not significantly reduce conventional TFP without accounting for energy and pollution, implying that the loss of GTFP is primarily due to environmental factors. When GTFP is disaggregated into green efficiency change (GEC) and green technology change (GTC), EG exports can increase GEC while reducing GTC. However, once the value of EG exports surpasses a certain threshold, EG exports raise GTC and GTFP. Furthermore, regional resource misallocation, environmental regulation, and absorptive capacity can all help to mitigate the negative EG‐GTFP relationship. This study could be useful for stakeholders interested in leveraging synergies between the economy and the environment by participating in global EG supply chains.
Article
We build a two-moment decision-theoretic framework to study how firms in the food-processing industry negotiate between risk and return while relying on imported inputs for production at an intensive margin. Two possibilities emerge: either a co-movement or a trade-off in risk and return under various industry and economic conditions. Building on our theoretical setting, we design a testable empirical framework that considers a panel of 316 firms in the Indian food-processing industry between 1993-2009. We find strong evidence of a decrease in the absolute risk aversion preference, although the magnitude varies measurably across firms.
Article
The progression of financial globalization increases the importance of valuation changes of foreign assets and liabilities, similar to that of current account in explaining the recent net foreign asset position of countries around the world. This study analyzes the long‐term determinants of valuation effects by using panel regression with 10‐year data span of 188 countries. The main findings are as follows. First, the size of foreign assets and relative portion of risky assets are positively associated with valuation effects, which suggests that general principles for long‐term individual investors also hold for an entire country. Second, current account is negatively associated with valuation effects, which suggests that these two mechanisms stabilize each other in overall international adjustment process. Third, exchange rate changes are often positively associated with valuation effects, which at times depend on foreign asset and liability positions. Fourth, per capita GDP are negatively associated with valuation effects. Fifth, current account is mainly associated with valuation effects due to asset price changes, but exchange rate changes and foreign asset and liability positions are mainly associated with valuation effects due to exchange rate changes. The relative proportion of risky assets is associated with both types of valuation effects.
Article
We document strong evidence that CEO incentive compensation can predict the significance of stock price momentum through discretionary accrual and real activities manipulation. The profit of momentum strategy increases with CEO pay‐for‐performance incentive, but decreases with CEO risk‐taking incentive. It also evaluates the effects of information uncertainty on such relationship. The evidence is more significant for firms with older and longer tenured CEOs and firms with more informed traders. The relationship between the profit of momentum strategy and CEO pay‐for‐performance incentive is stronger among CEOs without the risk‐taking incentive. Our results are robust for different sub‐samples based on before and after Reg FD and Sarbanes–Oxley Act, even after controlling for the potential endogeneity. Further, our findings are consistent with the information diffusion explanation of momentum and the agency theory that incentivised CEOs tend to manipulate information by smoothing good news, concealing mildly bad news and accelerating the disclosure of extremely bad news.
Article
This paper examines the relation between ownership concentration and stock price informativeness around the world. Using a sample of banks from 59 countries between 2002 and 2019, we find robust evidence from a linear model supporting the entrenchment effect. However, the nonlinear model shows that the effect of control rights on the informativeness of stock prices forms a U-shaped curve. We also document that banks with controlling shareholders have more volatility in the information content of bank stock prices in a poor regulatory environment or developing countries.
Article
This paper investigates the role of banks in shaping income inequality. We extend the current literature on the banking–inequality nexus by examining a sample of 103 Italian provinces for the period 2000–2018. We find that a higher banking development decreases income inequality. From a methodological viewpoint, we aim to contribute to the current literature by both adjusting the index of income inequality for the presence of tax evasion in income data and applying different estimation approaches to control for endogeneity. Some policy implications emerge from the findings of this study.
Article
This paper investigates the regional innovation symbiosis effect on firm green innovation. Chinese A‐share listed firms from 2012 to 2018 were the sample and the entropy method was used to construct a regional innovation symbiosis index. We found that innovation symbiosis significantly promoted firm‐level green innovation, with regional government environment investment playing an intermediary role. Further tests indicated that the effect was more pronounced when firms were in cities that had green industrial parks and in firms that publicly disclosed more environmental information. State‐owned firms were found to be more likely to focus on green innovation in higher innovation symbiosis systems.
Article
The current study uses the Generalised Method of Moments to examine the dynamic relationship between access to microfinance and poverty reduction. The panel‐data set is constructed from the Vietnam Household Living Standard Surveys during 2002–2008. The results show that access to microfinance in the previous period significantly improves per adult‐equivalent income and consumption of the households in the current period. However, previous participation in microfinance programs is not sufficient to help households escape from poverty. In addition, both private and government bank loans significantly help improve household per adult‐equivalent income, consumption, and poverty rates. The empirical results imply that a larger loan size, diversified loans for different consumption purposes, and improvement in infrastructure and facilities, especially in rural areas, are believed to help reduce poverty. 本研究使用广义矩估计来分析小额信贷获取与减贫之间的动态关系。使用2002‐2008年期间越南家庭生活水平调查构建面板数据集。结果表明,前期的小额信贷获取显著提高了当前时期相当于每位成人的家庭收入和消费。不过,前期参与小额信贷项目一事并不足以帮助家庭摆脱贫困。此外,私人银行和政府银行贷款都显著有助于提高相当于每位成人的家庭收入和消费,并减少贫困。实证结果暗示,更大的贷款规模、针对不同消费目的的多样化贷款、以及基础设施的改善(特别是在农村地区),被认为有助于更好地减贫。 El presente estudio utiliza el Método Generalizado de Momentos para examinar la relación dinámica entre el acceso a las microfinanzas y la reducción de la pobreza. El conjunto de datos de panel se construye a partir de las Encuestas de nivel de vida de los hogares de Vietnam durante 2002‐2008. Los resultados muestran que el acceso a las microfinanzas en el período anterior mejora significativamente el ingreso por adulto equivalente y el consumo de los hogares en el período actual. Sin embargo, la participación previa en programas de microfinanzas no es suficiente para ayudar a los hogares a salir de la pobreza. Además, los préstamos bancarios privados y gubernamentales ayudan significativamente a mejorar el ingreso por adulto equivalente de los hogares, el consumo y reducir la pobreza. Los resultados empíricos implican que se cree que un tamaño de préstamo más grande, préstamos diversificados para diferentes propósitos de consumo y mejoras en la infraestructura y las instalaciones, especialmente en áreas rurales, ayudan a reducir mejor la pobreza.
Article
This study analyzes panel data from the Tanzania Living Standards Measurement Study‐Integrated Surveys on Agriculture by the World Bank to investigate the impact of nonfarm entrepreneurship as a nonfarm activity on the value of crop output and household welfare, and to explore the potential transmission channels among rural farm households. Using a dynamic panel model to address endogeneity, our results reveal that nonfarm entrepreneurship has a positive impact on the value of crop output and household welfare. Our findings suggest that income from nonfarm entrepreneurship may enhance crop output through crop production technology and credit access, and household welfare through an increase in consumption expenditure and food expenditure as potential transmission mechanisms. Policies that enhance nonfarm entrepreneurship may also reinforce crop production and the welfare of farm households and are thus imperative. We suggest that policies that boost nonfarm sector growth such as agro‐processing and agribusiness enterprise development might achieve the twin objectives simultaneously: enhancing crop production and household welfare [EconLit Citations: C33, D24, Q12, 012].
Article
Full-text available
Governments try to improve re‐election chances by using fiscal instruments; they can shift voters' expectations of government competence because some voters are impaired by uninformedness. We argue that uninformed voters may also be impaired in another way which has not been considered in the literature, namely that uninformed voters are uncertain about the precision of that expected competence. Analytically, we show that political budget cycles (PBCs) are only produced when we have many uninformed voters and their expected competence of the government is fairly uncertain; or with few uninformed voters and certain expectations. This could explain two empirical puzzles on why we sometimes find and sometimes not (i) PBCs in developed and democratic countries with strong institutions, and (ii) that press freedom exacerbates PBCs. In a panel of 70 countries (1986–2015) we find empirical support for these findings. Results are robust to alternative specifications and explanations like fiscal rules, corruption and expected downturns.
Article
This paper aims to analyze the effect of information and communication technology (ICT) diffusion on the shadow economic activities in Africa for the period from 2000 to 2015. To this end, we use a panel data model on a sample of 48 countries. The results obtained show that the diffusion of ICTs, especially mobile telephony and the Internet, negatively and significantly affect the size of the shadow economy in Africa. The level of education, capital stock, economic growth, and financial development also contribute to reducing the size of the informal economy in Africa. However, our results suggest that informal activities are motivated by the abundance of natural resources and migrant remittances. Robustness checks are done through the system generalized method of moments and a change in the measurement of the shadow economy confirms the validity of the results. We recommend to decision‐makers to implement public policies facilitating the access and the use of new telecommunications tools and services and to improve the institutional framework to encourage private economic agents to invest in formal activities.
Article
Full-text available
This study aims to test empirically book-tax conformity strengthens the negative effect of tax avoidance on earnings persistence. Book-tax conformity denotes a relationship between accounting standards and tax rule in a country. Tax avoidance is measured using abnormal book-tax difference. The data used samples of listed firms in six Asian countries from 2001 through 2014, with an unbalanced panel of 8,207 firms-years, analyzed using generalized method of moments approach. The results showed that book-tax conformity increases the earning persistence on the effect of tax avoidance measures on earnings persistence.
Article
This study investigates the effects of monetary policy credibility and the open economy trilemma on monetary policy efficiency in developing countries. Based on a sample of 28 developing countries, the findings reveal that monetary policy credibility increases monetary policy efficiency. The results also show that central banks in developing countries have more efficient monetary policies when they choose a policy arrangement contrary to the ‘middle‐ground convergence’; but, to the extent they accumulate international reserves, it allows them to move to a middle‐ground strategy. Regarding the trilemma, the estimates suggest when monetary policy is independent, monetary policy is more efficient. Furthermore, when financial openness and exchange rate stability are deepened, central banks become less efficient in conducting monetary policy. However, when countries hold higher levels of international reserves, the positive effect of monetary autonomy on monetary policy efficiency decreases and the negative effect of financial liberalisation on monetary policy efficiency decreases.
Article
This paper examines how ownership structure interacts with monetary policy in shaping financial intermediaries' appetite for risk. By constructing a large panel of banks across Western Europe, we provide evidence that differences in bank ownership influence the transmission of monetary policy via the risk‐taking channel. While shareholder banks actively adjust the riskiness of their portfolios to changes in interest rates, stakeholder banks appear to be less responsive to such changes. These findings call for greater attention to the nature of bank ownership when setting monetary policy.
Article
Research has continued to indicate that the proliferation of information and communication technologies (ICTs) has the potential to alleviate poverty in developing countries. While theoretically, there are several mechanisms through which ICT may reduce poverty, they have not been empirically tested sufficiently. The present study aimed to recognize the mechanisms through which ICT may reduce poverty for a sample of 37 economies in the Sub‐Saharan Africa (SSA) region during the period 2003–2019. Altering the income distribution, improving the ecological system, increasing the employment rate, increasing per capita income, and improving institutional quality were the assumed mechanisms through which ICT may reduce poverty. The results of the two‐step system GMM technique showed that while an increase in the per capita income and employment rate contributed positively to poverty reduction, improvement in the environmental quality increased the poverty rate. The causal mediation analysis findings showed that ICT strengthened the negative impact of worsening the quality of the environment on poverty. However, the strengthened positive impact of ICT on poverty through employment and per capita income was greater than the negative influence through the environmental mechanism. Thus, all national strategies or initiatives aimed at reducing poverty in SSA must incorporate pro‐poor ICT policies.
Article
The purpose of this research is to investigate the influence of corporate board and audit committee characteristics on firm performance as measured by accounting-based ratios (earnings per share, return on asset, and return on equity) as well as the market-based measure (Tobin's Q). In addition, this research introduces political connections to examine whether it can moderate the relationship between corporate board characteristics and firm performance. The study reveals that a higher proportion of independent directors and CEO duality positively affected firm performance. However, board meetings and board financial experience have no affected firm performance. The study also shows that audit committee independence, audit committee size, and audit committee expertise are positively related to firm performance. In contrast, it finds no discernible impact of audit committee meetings on firm performance. Our findings also suggest that the beneficial influences of the corporate board, in terms of higher firm performance, are greater in firms with political connections. To the best of the researchers’ knowledge, this is almost certainly the first analysis to examine the relation between the corporate board, audit committee characteristics, and firm performance, and the moderating effect of political connection of this relationship.
Article
We adopt a novel variation of the traditional structure‐conduct‐performance modelling approach, looking at between, rather than within, industries to study the impact of changes in the bank market structure on the corporate performance of financial technology (fintech) firms using firm‐level data. We use two samples, one with 231 fintech firms and one with 231 non‐fintech firms across 24 industrialized countries over the 10‐year period from 2008 to 2017. We find that changes in bank market power have a positive impact on the performance of fintech companies suggesting that such firms complement rather than compete with banks. On the other hand, within the non‐fintech sector, we find that changes in bank market power have no impact on non‐fintech firms. Our results are robust to several tests.
Article
Full-text available
We examine whether countries with low initial levels of agricultural total factor productivity (TFP) tend to ‘catch up’ with the technology leaders. We first compare relative levels of agricultural TFP, capital services and labour input levels in agriculture for 17 OECD countries between 1973 and 2011. Then we apply (conditional) convergence analysis to the panel data to examine the speed of convergence and test whether the convergence is transitory or permanent by analysing TFP changes over the business cycle. Capital intensities, quality improvement of capital, factors such as human capital spillovers, and certain agricultural policies are conditioning variables. We examine how differences in relative capital intensities affect agricultural productivity convergence over the business cycle. We find evidence that the speed of convergence increases during periods of contraction in economic activity. Q16, Q17
Article
This study revisits the foreign direct investment (FDI)–growth nexus in Africa, categorizing countries as resource‐rich or resource‐scarce for the period 2000–2017 in an attempt to capture the impact that cross‐country natural resource endowment differences may have on the FDI–growth relationship. Thus, the study is an attempt to answer the question: Does being a natural resource‐abundant or resource‐scarce country alter the FDI‒growth nexus? Using the System Generalized Method of Moments, it is found that the effects of FDI on economic growth vary depending on countries' resource richness. While FDI affects growth positively and significantly in the resource‐scarce category, the size of such an effect varies across countries within the group. The better the human capital and institutions, the higher the FDI‐induced growth. However, no effect of FDI on growth has been identified for the resource-rich category. The findings suggest that African countries in general, and resource‐rich economies in particular, need to look carefully and critically at the type of FDI inflows they receive.
Article
Full-text available
This paper re-examines a well-established hypothesis postulating that life expectancy augments incentives for human capital accumulation, leading to global income differences. A major distinguishing feature of the current study is to estimate heterogeneous panel data models under a common factor framework, which explicitly accounts for parameter heterogeneity, unobserved common factors (UCFs), and variables' non-stationarity. In sharp contrast to most previous studies, I find that the impact of health improvements on human capital accumulation turns out to be imprecisely estimated at conventionally accepted levels of statistical significance. I demonstrate that conventional estimates of the educational returns to rising longevity are derived from estimating misspecified models at least partially due to parameter heterogeneity and the presence of UCFs.
Article
The supply chain disruption drives the firms to source the same inputs from multiple suppliers in low‐cost countries. However, the imposition of economic sanctions may prevent firms from enjoying diversification benefits of global sourcing complexity. Using data for more than 127 countries from 1997 to 2014, we uncover the effects of economic sanctions on the global sourcing complexity. After extensive robustness checks, our main findings reveal that economic sanction hampers global sourcing complexity. These effects are conditional on the level of economic development and the occurrence of financial crises in a particular country. Our results are robust for various forms of economic sanction, alternative estimators, and when controlling endogeneity problems. Our findings suggest important foreign policy and managerial implications for the countries and firms in response to economic sanctions.
Article
Full-text available
This study examines the role of global value chain (GVC) participation in high technology exports using data over 120 countries during the 1995–2019 period. Our results suggest that GVC participation matters for high‐tech exports. While GVC participation with higher income countries is significantly associated with high‐tech exports, GVC participation with lower income countries has no effect. However, regardless of the origin countries, high‐tech GVC participation raises high‐tech exports. Moreover, GVC participation has a positive impact on high‐tech exports to lower income countries. Finally, we present evidence that the determinants of high‐tech exports vary by the income level of destination countries.
Article
This paper studies the relationship between public investment and private investment in a sample of 21 Organization for Economic Cooperation and Development (OECD) countries between 2000 and 2019. Using panel data nonlinear threshold regression models, the empirical results show that there exist threshold levels for the share of public investment in private investment, the real Gross Domestic Product (GDP) growth rate and the real interest rate that affect the relationship between public and private investment. All estimates support a crowding‐in effect of public investment on private investment. In terms of policy prescriptions, by increasing public investment, OECD governments can expect positive spillovers to private investment.
Article
This study aims to analyse the effects of the General Agreement on Trade in Services (GATS) on the investment activities of the Pakistani insurance sector. First, we analyse the impact of GATS on the overall and company-wise return on investment of the insurance sector of Pakistan. In a panel data setting, the traditional fixed and random effect models are unsuitable for dealing with the possible issues, including endogeneity, unobserved heterogeneity, profit persistency, and the correlation between lagged dependent variables and independent variables. Therefore, we apply the Generalised Method of Moments (GMM) system estimator to the panel data from 1984 to 2018. In the Arellano-Bond framework, the estimated results indicate that the overall investment returns of the Pakistani insurance sector have increased after the GATS membership. However, company-wise analysis reveals mixed evidence. The average returns of IGI Insurance Limited and EFU General Insurance Limited have increased significantly after the GATS membership. These results support one of our empirical conjectures that a rising tide lifts some boats more than it does others. Then, we apply Markowitz’s Portfolio Theory to estimate the portfolio returns and the associated risk using the financial statements data from 1984 to 2018. The estimates of portfolio analysis reveal that the portfolio returns of the Pakistani insurance sector improve by 6.70 percentage points after the membership. However, the associated portfolio risk also increases by 11.13 percentage points, 7.40 times higher than the Pre-GATS risk. Despite the better returns, there is an intensive increase in investment volatility after GATS membership. This study provides a valuable reference for insurance managers and the Ministry of Finance and Securities & Exchange Commission of Pakistan to control and improve the insurance sector’s performance in Pakistan.
Article
Full-text available
This study employs macrodata for 23 African countries to examine whether good governance interacts with economic globalisation (EG) to foster inclusive green growth (IGG). First, the study finds that EG hampers IGG in Africa. Second, although unconditionally good governance promotes IGG, only government effectiveness interacts with EG to foster IGG. Across the social and environmental sustainability dimensions of IGG, however, the effects differ substantially. Notably, whilst the EG-governance pathways yield remarkable environmental sustainability net gains, a modest harmful effect was observed for socioeconomic sustainability. Evidence from our threshold analyses also suggests that whilst government effectiveness is critical for propelling EG to promote IGG, across the social and environmental perspectives ofIGG, it is investments in building frameworks and structures for corruption control and the rule of law that are crucial. Our results shed new light on IGG and have several implications for Agenda 2030 and Agenda 2063.
Article
This article examines economic freedom’s impact on quality of life conditional on the political risk factors in Africa over the period 1985–2016, using the Generalised Method of Moments (GMM) estimation technique. The results show that economic freedom has a significant positive effect on the quality of life. However, political risk fundamentals, namely civil liberties, political rights and conflict, cause economic freedom to deteriorate the quality of life in African. These results support North’s (1990) argument that political institutions play a cardinal role in Africa’s economic outcomes and well-being. Therefore, governments in Africa must improve on the political factors to enhance economic freedom’s impact on quality of life. Moreover, policies that lead to an increase in aid and economic growth will improve the quality of life in Africa. JEL: C23, I31, P25
Article
This study looked at the impact of financial development, environmental sustainability and energy intensity on the transition of SSA countries to safe and green energy use. This was pursued using a dynamic panel model—system generalized method of moments (SGMM), given its capacity to address endogeneity problems in panel estimation processes. The study used datasets covering a 25‐year period (1995–2020) for 46 countries out of 52 SSA countries chosen on the basis of the availability of data on energy and financial development indicators. Findings arising from this study are summarized as follows: firstly, that energy transition is negatively responsive to monetization ratio and positively responsive to bank development. Secondly, that energy transition is a response to increasing emissions in the studied countries. In addition, it was discovered that the greater the degree of energy intensity (energy inefficiency), the higher the need for energy transition. Energy sources whose intensity vary inversely with productive activities are recommended for SSA countries. Also, to meet the Paris climate goals, there is the need for policies that drive energy transitions while decoupling and reducing the use of fossil fuels.
Article
This work tackles from an empirical perspective the widely debated relationship between sustainability in business practices and profitability, focusing on a sample of listed European firms. To measure the extent of sustainable practices at the firm level, the Comprehensive Environmental, Social, and Governance (ESG) score is proposed. The indicator, computed using the Mazziotta‐Pareto method, combines qualitative ratings on adherence to ESG standards with quantitative observations on the extent of data disclosure. Firms failing to pursue full disclosure are penalized. Focusing on the constituents of the Euro Stoxx 300 index, a dynamic panel model is implemented, where profitability is explained by the indicator. The results show that sustainability in business practices reduces profitability. These findings are in line with a strand of literature that highlights the role of strategic disclosure of ESG information on part of firms. Strategic disclosure occurs as a combination of greenwashing and social washing, with firms overstating the extent of their positive behaviors. The integration of sustainable practices within successful business models thus remains a relevant societal problem. The current EU policy framework is discussed in line with our findings.
Article
Agrifood sector mechanization service providers (MSP) and mechanization equipment retailers (MER) have increasingly become the providers of mechanical technologies for smallholders in developing countries, including Myanmar. Evidence remains scarce on the effects of COVID‐19 on these MSPs and MERs. This study provides insights into the effects of COVID‐19 restrictions on MSPs and MERs in Myanmar, using unbalanced panel data from five rounds of phone surveys. Direct responses to COVID‐19 involving movement restrictions, market disruptions, and growing financial challenges had significant negative effects on revenue prospects, service delivery, and sales of machines and equipment. Negative revenue prospects during a particular period can further hurt revenue prospects in subsequent periods. This is consistent with the hypotheses that MSPs who had incurred high sunk costs in machines can engage in more desperate and, thus, potentially suboptimal business practices to recover the sunk cost. Overall, policies to minimize movement restrictions and various financial struggles and mitigate any pessimism at the beginning of the production season are all important to make sure MSPs and MERs continue to function effectively under COVID‐19.
Article
The impact of board gender diversity on the financial performance of firms is not known. This is because empirical investigations have yielded inconclusive outcomes. This study engages data from 408 microfinance institutions (MFIs) covering the period 2010-2018 from the six microfinance regions to investigate this impact using the Least Squares Dummy Variable (LSDV) and the System Generalized Method of Moments (SYS-GMM) estimation techniques. The study also explores whether judicial efficiency exerts any significant effect on the board gender diversity-financial performance nexus. The study observes that board gender diversity exhibits a strong negative effect on the financial performance of MFIs. The study also observes that the effect of board gender diversity on the financial performance of MFIs escalates in the presence of judicial inefficiency. The study, therefore, unveils the judicial system as a channel through which gender diversity drives the financial performance of MFIs negatively.
Article
Understanding how and why economies structurally transform away from agriculture as they grow is crucial for developing sensible growth strategies and farm and food policies. Typically, analysts who study this and related structural change issues focus on sectoral shares of gross domestic product (GDP) and employment. This article draws on trade theory to focus as well on exports. It also notes that the trade costs of some products are too high at early stages of development to make international trade profitable, so a nontradables sector is recognized. The general equilibrium model presented in the theory section provides hypotheses about structural transformation in differently endowed open economies as they grow. Those hypotheses are tested econometrically with a new annual endowments dataset covering 1995–2018 for more than 130 countries. The results are consistent with long run de‐agriculturalization in the course of national economic growth in terms not only of sectoral shares of GDP and employment but also of exports. We find those shares are not significantly affected by either differences across countries in relative factor endowments or relative rates of sectoral assistance from government; but the agricultural GDP and employment shares are higher the higher is the share of agriculture in national exports.
Article
With the inexorable march of climate change, increased flooding is inevitable. Understanding the feedback between federal flood mitigation policies and the ways in which local governments build flood resilience is a significant gap in the literature. In particular, the effect that federal flood mitigation grants have on the intensity of local flood mitigation is nonexistent. This work measures flood risk mitigation by using the level of participation in FEMA's Community Rating System (CRS). Communities that participate in the CRS and undertake mitigation are awarded points; more points imply a higher level of participation. Since its inception in 1990, CRS communities have received considerably more federal pre‐disaster flood mitigation grants compared to non‐CRS communities. This study assesses the effect of federal pre‐disaster flood mitigation grants on the level of participation in the CRS program. We use data on Hazard Mitigation Assistance programs and CRS participation data between 2010 and 2015. We link these data to flood risk and socioeconomic information. Our results indicate (i) federal pre‐disaster flood mitigation grants do not appear to significantly influence the level of CRS participation, (ii) the effect of flood risk and socioeconomic factors on the level of CRS participation are mixed, and (iii) the current level of CRS participation is influenced by the previous level of CRS participation, which is not tied to federal pre‐disaster flood mitigation grant. These findings add to the growing discussions on the drivers and barriers of local flood risk mitigation.
Article
The literature on the association between financial development and environment quality covers many dimensions. Nonetheless, the role of governance and institutional quality in this relationship has been highlighted moderately. Consequently, this research aims at extending the existing literature on the impact of financial development on CO2 emission, by integrating the role of institutional quality in the financial development-carbon emission nexus. By adopting a panel dataset of 20 MENA countries between 2002 and 2018 and using Dynamic GMM models, the study examines firstly the impact of institutional quality on carbon emissions and revealed the important role of government effectiveness and quality of regulation in preserving environment quality. Furthermore, the paper tests how the combination of financial development and institutional quality can change the dynamic of their separate control ability on pollution. The results show indeed that their impact on CO2 emissions is amplified and changes from non-Granger cause type to Granger cause type.
Article
Full-text available
Este artículo explica la dinámica de la inflación en los departamentos de Colombia entre 2009 y 2019, estimando la curva de Phillips neokeynesiana (NKPC, por sus siglas en inglés). Se encuentran diferencias en la explicación de la inflación y se evidencia que la NKPC permite describir la baja probabilidad de cambios en los precios en algunos departamentos, especialmente de la zona central del país. Los coeficientes estimados apoyan la importancia que tiene la inflación esperada en la formación de precios, y con menor importancia el papel de la inflación rezagada (persistencia de la inflación). Esta persistencia de la inflación es un reflejo de las rigideces estructurales que reducen la capacidad de las empresas de un departamento para modificar sus precios en relación con otros. Estas diferencias en los procesos que determinan la dinámica de la inflación entre departamentos tienen implicaciones importantes para la conducción de política monetaria en Colombia.
Article
This article aims to understand the impact of board gender diversity (BGD) on the firm's deviation from efficient risk-taking (DERT) along with the mediating effect of sustainability reporting and the moderating effect of CEO overconfidence. The sample consists of 77 South Asian agri-food firms over the period 2010–2019. To account for endogeneity and other statistical biases, we use a system GMM approach. The results show that there is a non-monotonic relationship between BGD and DERT. Consistent with critical mass theory, we find that at least three women on board (WOB) are required to reduce the firm's DERT. The findings of the study also reveal that the overconfident CEO may restrict the female directors to achieve the firm's efficient risk-taking. The evidence further suggests that sustainability reporting quality (SRQ) does not mediate the link between BGD and a firm's DERT. The robustness tests are performed based on alternative risk proxy and the likelihood of financial distress. Our results theoretically support stakeholder, critical mass, and agency perspective that South Asian capital markets should enhance the representation of WOB to mitigate agency conflicts and to improve long-term firm sustainability.
ResearchGate has not been able to resolve any references for this publication.