Journal of Economic Studies

Gnangnon, Sèna Kimm

2023 Journal of Economic Studies

doi: 10.1108/jes-02-2022-0078

The relationship between real exchange rate and services export diversification is at the heart of this study.Design/methodology/approachThe analysis is performed using a sample of 113 countries over the period 1985–2014, and the 2-step system Generalized Method of Moments (GMM) approach. The analysis uses both the Theil index and Herfindahl–Hirschman index of services export concentration.FindingsThe analysis shows that over the full sample, the real effective exchange rate appreciation induces a greater services export diversification. This outcome applies to high-income countries and developing countries. However, the positive effect of the appreciation of the real exchange rate on services export concentration is lower in least developed countries than in other countries. Finally, the effect of the appreciation of the real exchange rate on services export concentration in tax haven countries depends on the indicator of services export concentration, as this is positive for the Theil index and negative for the Herfindahl–Hirschman index of services export concentration.Research limitations/implicationsThese findings highlight the strong influence of real exchange policies on countries' path of services export diversification.Originality/valueTo the best of the authors' knowledge, this topic is being addressed in the empirical literature for the first time.

McCollough, John D.; Sargsyan, Gevorg; Luo, Zhe

2023 Journal of Economic Studies

doi: 10.1108/jes-05-2022-0299

This paper focuses on one vital consequence which is that future infrastructure maintenance cost per capita will increase. Using a sample of 23 developed countries, this paper looks at rail line maintenance cost per capita in the year 2020 versus rail line maintenance cost per capita in the year 2100. This analysis can be applied to most other infrastructure maintenance costs in the future.Design/methodology/approachHowever, this paper focuses on one vital consequence which is that future infrastructure maintenance cost per capita will increase. Using a sample of 23 developed countries, this paper looks at rail line maintenance cost per capita in the year 2020 versus rail line maintenance cost per capita in the year 2100. This analysis can be applied to most other infrastructure maintenance costs in the future.FindingsThe findings show that trail line maintenance costs per capita in the year 2100 will increase significantly for most developed countries.Research limitations/implicationsThis research shows the negative consequences of declining birth rates in a very vital and important area.Practical implicationsDespite declining birth rates and population decline in the future, many infrastructure systems still need to be maintained.Social implicationsMaintaining the infrastructure will extract increasing amounts of vital national resources away from other societal concerns.Originality/valueFrom an extensive literature review, very little, if any, has been written on this subject. Yet, this topic is highly important and will continue to get more focus in the future.

Dada, James Temitope; Ojeyinka, Titus Ayobami; Al-Faryan, Mamdouh Abdulaziz Saleh

2023 Journal of Economic Studies

doi: 10.1108/jes-06-2022-0352

This paper investigates the (a)symmetric effects of financial development in the presence of economic growth, energy consumption, urbanization and foreign direct investment on environmental quality of South Africa between 1980 and 2017.Design/methodology/approachA robust measure of financial development is generated using banking institutions and non-banking institutions market-based financial development indicators, while environmental quality is measured using carbon footprint, non-carbon footprint and ecological footprint. The objectives of the study are captured using linear and non-linear autoregressive distributed lag.FindingsThe result from the symmetric analysis suggests that financial development stimulates carbon footprint and ecological footprint in the short run; however, financial development abates non-carbon footprint. In the long run, financial development has a significant negative effect on carbon footprint and ecological footprint. However, the asymmetric analysis established strong asymmetric effect in the short run, while no asymmetric effect is found in the long run. The short run asymmetric analysis reveals that positive shock in financial development increases carbon footprint and ecological footprint; however, positive changes in financial development reduce non-carbon footprint. Negative shocks in financial development, on the other hand, have a positive impact carbon footprint, non-carbon footprint and ecological footprint.Practical implicationsThe study's outcome implies that the concept of “more finance, more growth” could also be applied to “more finance, better environment” in South Africa. The study offers vital policy suggestions for the realization of sustainable development in South Africa.Originality/valueThis empiric adds to the body of knowledge on the influence of financial development on various components of environmental quality (carbon footprint, non-carbon footprint and ecological footprint) in South Africa.

Giammanco, Maria Daniela; Gitto, Lara; Ofria, Ferdinando

2023 Journal of Economic Studies

doi: 10.1108/jes-06-2022-0348

Non-performing loans (NPLs) may determine an overall weakness of the banking system within a country. The purpose of the present study is to analyze the impact of government failures on NPLs in Asian countries in the time span 2000–2020. The variables employed as proxies of government failures are public debt as % of gross domestic product (GDP) and a government ineffectiveness index proposed by the World Bank.Design/methodology/approachThe econometric approach employed is a panel generalised time series (GLS) model with heteroskedasticity and autocorrelation specific to each panel.FindingsThe results confirm that public debt as % of GDP and governmental ineffectiveness impacted significantly on NPLs for Asian countries in the observed period.Originality/valueThe literature offers similar results only for some individual Asian countries, while a wider analysis is lacking for Asian macroareas. The present paper considers 31 Asian countries, and supports the idea that a healthy financial sector is correlated to institutional quality and political regime. Hence, policy makers are advised to monitor governance indicators to reduce NPLs.

Clifford, John Paul; Doran, Justin; Crowley, Frank; Jordan, Declan

2023 Journal of Economic Studies

doi: 10.1108/jes-03-2022-0146

This article examines the links between average city size, fiscal decentralisation, and national economic growth in 33 Organisation for Economic Co-operation and Development (OECD) countries.Design/methodology/approachThe data in this paper comprise an unbalanced panel dataset which contains economic growth indicators, average city size, fiscal decentralisation indicators and control variables in 33 OECD member countries from 1975 to 2015 in five-year intervals. Fixed-effects (FE) estimators are used for the analysis.FindingsThis research finds i) countries with larger weighted average city sizes have higher economic growth, ii) countries with greater fiscal decentralisation have higher economic growth, but iii) countries with larger weighted average city sizes with greater decentralisation have lower rates of economic growth.Originality/valueThe research highlights the importance of agglomerations and decentralised governance and management for economic growth. While the findings are consistent with previous evidence that larger city sizes and fiscal decentralisation are separately associated with higher rates of economic growth, the authors find countries which have larger cities and greater fiscal decentralisation experience lower rates of economic growth highlighting a need for caution on decentralisation agendas in such cases. The implications of this suggest policymakers should proceed with caution on decentralisation agendas in countries with large cities.

Mazhar, Ummad

2023 Journal of Economic Studies

doi: 10.1108/jes-08-2022-0416

The health costs associated with obesity are increasing in developed and emerging economies. Particularly important, though remaining underexplored, is the overall impact of health risks associated with being obese and overweight on the productivity of firms in a cross-country setting. The purpose of this paper is to address these issues.Design/methodology/approachThis paper exploits the natural variation in the percentage of obese males in the population as an exogenous health risk randomly distributed across firms in each country.FindingsInvestigating this link for a sample of around 80 emerging countries, the evidence suggests a significant negative effect of health risks on productivity.Research limitations/implicationsThe identification assumptions are checked using different approaches to establish the robustness of the empirical link.Originality/valueThis study helps us understand the microlevel effects of the rising average obesity rate. This knowledge is rare in emerging economies which are facing the highest risks of obesity and cardiovascular diseases associated with it.

Apergis, Nicholas

2023 Journal of Economic Studies

doi: 10.1108/jes-05-2022-0287

This study explores the role of rising US student loan debt in explaining income inequality.Design/methodology/approachThe study uses the autoregressive distributed lag (ARDL) modeling approach to explore the short- and long-run impact of college debt on income inequality in the US through quarterly data over the period 2000–2019.FindingsThe results demonstrate the detrimental impact of student debt on national and regional income inequality. Moreover, the regional analysis highlights a more pronounced impact of student debt on income distribution in South and West regions. The findings document that these regions, with the lower student debt proportions, have the lowest average cost of attending college. Finally, the analysis explores two potential channels – i.e. race and homeownership – that could explain the link between college student debt and income inequality.Practical implicationsThe results can be helpful for policymakers and researchers to formulate practical approaches for assessing and addressing the rising national student debt and income inequality.Originality/valueThis is the first, to the best of the author's knowledge, study that explores the impact of US college debt on income inequality.

Esquierro, Leon; Da Silva, Sergio

2023 Journal of Economic Studies

doi: 10.1108/jes-03-2022-0140

The authors test the granularity hypothesis to international inflation spillovers using annual exports and inflation data for 138 countries from 1991 to 2020. This study aims to discuss the aforementioned objective.Design/methodology/approachFirst, the authors quantify the power law for the right tail of the export volumes distribution and discuss its implications. Then, the authors compute the granular residual, a measure of shocks to the largest countries.FindingsThe authors find export volumes across countries are not Gaussian-distributed but follow a power law. This finding means the largest countries disproportionately impact world inflation. In addition, the authors find that countries with higher relative weight in international trade determine a portion of international spillovers greater than their trade share. Moreover, eight big grains are responsible for the bulk of inflation spillovers.Practical implicationsThe policy implication is that other countries' central banks should closely monitor the eight big grains when conducting their domestic monetary policy.Originality/valueThis is the first study spotting the problem of granular inflation spillovers.

O'Connell, Michael

2023 Journal of Economic Studies

doi: 10.1108/jes-05-2022-0261

In order to provide an updated view on the drivers of German stock returns, the authors evaluate the relative performance of nine competing neoclassical asset pricing models in the German stock market between November 1991 and December 2021.Design/methodology/approachThe authors conduct asymptotically valid tests of model comparison when the extent of model mispricing is gauged by the squared Sharpe ratio improvement measure of Barillas et al. (2020).FindingsThe study finds that the Fama and French six-factor model with both traditional and updated value factors emerges as the dominant model.Originality/valueThe authors shed new light on the drivers of German stock returns through an updated and extended period of analysis, wider range of potential models and utilization of valid asymptotic tests of model comparison when models are nonnested (Barillas et al., 2020).

Ashenafi, Biruk Birhanu; Dong, Yan

2023 Journal of Economic Studies

doi: 10.1108/jes-05-2022-0311

The purpose of this study is to firstly, find out does the relationship between finance, trade and income inequality provides matching evidence using the macro- and firm-level data? Secondly, whether a causal relationship from the firm-specific data can be established.Design/methodology/approachThe authors employed a panel data fixed effect regression and two-stage least square (2sls) using key instruments. Their analysis is conducted based on a sub-sample analysis that emphasizes Latin America Region (LAR), Africa (AFR) and Asia by merging South Asia, East Asia and Pacific Regions (SEAR). These areas are characterized by an unequal society represented by a mounting gini index (Robilliard, 2020; De Rosa et al. 2020). Accordingly, the authors estimated a comparable model to unfold the impact of finance and trade. Besides, the authors exploited the interaction between their predictors with labor productivity and ownership structure to claim the difference between the results using the two data sets. The effort to establish a causal relationship from the combined firm-level data challenges the current literature that leans towards either macro or micro perspectives.FindingsThe result obtained from macro-level data shows that while financial development widens income inequality, the impact of trade on income inequality is negative. However, the estimation result from the combined firm-level data portrays that the proportion of investment financed by banks and trade widens income inequality. Given the contrasting result concerning trade, the authors test whether the firm-level evidence is causal following different identification strategies. The exercise shows that the correlation presented in the paper is causal. That challenges the current literature that falls short of providing firm-specific evidence.Social implicationsThe authors adds to a growing body of literature on finance, trade and income inequality by paying due emphasis on firms from 2006 to 2020. The authors show the private sector development effect on income inequality by linking topics from the firm and country-level data.Originality/valueThe authors extend the macro-level discussion and contribute to the existing literature by offering firm-specific evidence on the relationship between finance, trade and income inequality.

Andini, Corrado

2023 Journal of Economic Studies

doi: 10.1108/jes-05-2022-0313

The aim is to assess how a policy of tertiary education for all affects the shape of the unconditional earnings distribution.Design/methodology/approachThe paper discusses the quantile-regression literature looking at the link between education and wage inequality, also proving new evidence based on unconditional quantile regressions.FindingsThe findings support the idea that a policy of tertiary education for all increases the overall level of wage inequality.Research limitations/implicationsThe research has implications for public policy and administration. Among the limitations, the paper does not deal with distributional aspects related to other outcomes (e.g. health outcomes) of the policy of interest.Practical implicationsThe analysis highlights a series of potential government interventions aimed at reducing the wage-inequality externalities of the policy of interest.Social implicationsA policy of tertiary education for all, by itself, is not useful to fight wage inequality.Originality/valueThis paper belongs to the small group of studies using unconditional quantile regressions to study the link between education and wage inequality. It is the first study specifically looking at the distributional effects of a policy of tertiary education for all.

Caferra, Rocco; Falcone, Pasquale Marcello

2023 Journal of Economic Studies

doi: 10.1108/jes-06-2022-0353

This paper sets out to investigate investors' sustainable preferences under different market conditions. Specifically, the authors examine the existence of a positive sustainable asset pricing gap, and whether it is influenced by the socioeconomic and financial sentiments. The increase of uncertainty rises investors' skepticism whether sustainable companies are under-performing the traditional counterparts, causing larger increasing gap. Conversely, if sustainable assets are overperforming, the increase of market uncertainty raises investors' sustainable preferences.Design/methodology/approachThe authors examine the existence of a positive sustainable asset pricing gap, and whether it is influenced by the socioeconomic and financial sentiments. Through a quantile regression, the authors remark the variability of sustainable preferences where market participants, although recognizing the present and future value added of sustainable investing, also show skepticism (i.e. asymmetric tail behavior). However, the analysis of the total change of sustainable investments returns over time demonstrates the emergence of positive viewpoints incentivized by economic and market uncertainty.FindingsThe market-driven social responsibility exalts the positive insights regarding the future of sustainable developments. As the authors discuss along the paper, investors are gaining awareness about the environmental and social goals pursued by socially responsible companies. Hence, the authors consider how economic instability might stimulate the assessment of the social and environmental impact of the unsustainable production systems, switching investments toward virtuous sustainable companies. This could generate a series of positive externalities that might improve the welfare conditions of the whole society.Originality/valueThe authors conduct an original empirical exercise, combining different techniques (i.e. quantile regressions and wavelet analysis). To the best of the authors’ knowledge, this is the first paper trying to evidence a systematic connection between market uncertainty and sustainable preferences accounting for different market states (thanks to quantile regressions).