Empirical Economics

Thapliyal, Prerna; Gulati, Rachita; Nauriyal, Dinesh Kumar

doi: 10.1007/s00181-025-02762-9pmid: N/A

This paper examines green total factor productivity (TFP) growth in the Indian manufacturing sector using the state-level data from 2005 to 2018. We treated greenhouse gas emissions as undesirable output when estimating green TFP using the Global Malmquist Luenberger Productivity Index. Further, the panel spatial econometric model is employed to predict the spillover effects of environmental regulations and other factors on green TFP. The results reveal that technological progress enhanced green productivity by 0.3 percent on average, with significant inter-state heterogeneity. Overall, environmental regulations have a significant inverted-U-shaped and nonlinear effect on green productivity in the Indian manufacturing industry. When an inverse distance matrix is used in conjunction with the space- and time-fixed spatial Durbin model, regulations also generate spatial spillovers. Additionally, economic development, urbanization, and energy intensity have been identified as potential determinants influencing green productivity. We recommend policies to sustain growth in the sector.

Li, Mingze Marcellus; Stengos, Thanasis; Sun, Yiguo

doi: 10.1007/s00181-025-02775-4pmid: N/A

The “Resource Curse" phenomenon has been a central theme in resource economic research over the past few decades, with numerous studies highlighting the paradox where countries rich in natural resources experience slower economic growth. This paper revisits this critical issue by examining the relationship between natural resource rents and economic growth, specifically in non-OECD countries. Given that many of these nations are both resource-rich and characterized by relatively low economic growth, this study employs a spatial Durbin model to provide a nuanced understanding of the impact of resource rents on economic performance. Our findings reinforce the notion of the “Resource Curse," revealing that, in most cases, resource rents exert a detrimental effect on economic growth, thereby exacerbating the economic challenges faced by these countries. In addition, the results reveal that when the “Resource Curse" emerges, not only the home country but also neighboring countries are likely to be harmed. The results underscore the importance of effective resource management and policy interventions to mitigate the adverse effects of resource dependence on long-term economic development.

Jimenez Mori, Raul

doi: 10.1007/s00181-025-02763-8pmid: N/A

Low-quality infrastructure services persist in developing countries, a situation that mainly affects the poorest households. Informal access is common, and public services are heavily subsidized. This paper exploits choice experiments, specifically designed for both formal and informal users, with substantial variation in the received actual quality of services, to examine whether households in each situation are willing to pay for electricity service improvements. The analysis takes place in the urban Dominican Republic, a country with one of the highest rates of electricity theft and lowest quality service in Latin America. The results strongly indicate that households value service improvements, with informal users willing to pay an average of around US$9 and formal users willing to pay an extra 22% above their current electricity bill. The estimated valuations are significantly heterogeneous across households. This variance is mainly explained by household income, satisfaction with current electricity services, time allocation preferences, and household characteristics such as family size and dwelling size. These results indicate welfare losses equivalent to over 35% of the annual direct subsidy made by the Dominican government to the utilities.

Li, Lin; Wei, Kecheng; Han, Jiliang; Zhu, Yuchun

doi: 10.1007/s00181-025-02767-4pmid: N/A

The digital economy has gradually become an essential engine for rural modernization, with significant implications for enhancing rural household development resilience and consolidating the achievements in poverty alleviation (Wang et al. in Energy 282:128692, 2023). This paper analyzes the impact mechanism and heterogeneity of digital empowerment on rural household development resilience drawing on the empowerment theory (Perkins and Zimmerman in Am J Commun Psychol 23:569–579, 1995). It utilizes a double machine learning estimation approach (Chernozhukov et al. in Economet J 21(1):C1–C68, 2018) by relying on data from 5174 rural households collected in the Yellow River Basin in 2020 and 2022 in China. The findings reveal that digital empowerment contributes to improving rural household development resilience, and the results remain robust after replacing key variables, re-processing samples, and resetting the double machine learning model. The mechanism analysis indicates that digital empowerment can enhance social capital accumulation, broaden information channels, and promote equal access to public services, thereby enhancing rural household development resilience. Heterogeneity analysis found that digital empowerment is particularly beneficial for enhancing the development resilience of low-income rural households headed by individuals with low education levels and supported by relevant policies. This research provides policy implications for bridging the “digital divide,” shaping “household resilience,” and advancing common prosperity.

Isiaka, Abdulaleem; Mihailov, Alexander; Razzu, Giovanni

doi: 10.1007/s00181-025-02768-3pmid: N/A

We assess the impact of spending reallocations on inequality in a fiscally neutral scenario for a sample of 51 middle-income countries over the period between 2005 and 2015. This is relevant given that developing countries that aim to address increasing inequalities cannot easily rely on either deficit and debts nor increased revenues to finance social spending sectors, such as education, health and social protection. We also look at the impact on different parts of the income distribution and at the role of the Global Financial Crisis of 2007–2009. Overall, we find that reallocations to the education sector are associated with a reduction in income inequality. These benefit all subgroups across the population, including the poor and the relatively rich within a country’s income distribution. Reallocation of spending in favour of health, social protection and agriculture is more nuanced and less generalized across the sample of countries. We therefore conclude that greater consideration should be given to the redistributive effects of government budget reallocations than is typically the case.

Arouna, Aminou; Owusu, Eric S.; Yergo, Wilfried Gnipabo; Yabi, Jacob A.

doi: 10.1007/s00181-025-02766-5pmid: N/A

This paper assesses the effects of the adoption of site-specific recommendations generated through an Android app called RiceAdvice on rice farmers’ technological advantage and managerial performance in the Senegal River Valley (SRV). The study uses data collected through multi-stratified sampling procedures and comprises 1200 adopters and non-adopters of the app. Our approach involves addressing both selection bias and differences in production technologies to evaluate the causal impact of the app. Impacts are evaluated through a framework that couples recent selectivity-correction stochastic production frontier and metafrontier techniques with statistical matching. Based on these frontiers, the technical efficiency, technology gap ratio, and meta-technical efficiency are calculated as the bases for examining impacts. We found that production technologies are systematically different between adopters and non-adopters and the results noted the presence of selection bias, although only for adopters. The mean technology gap ratios are 94.5% for adopters and 76.6% for non-adopters, suggesting that relative to the latter, the former group produces approximately 18% more of the potential rice output associated with the best-practice technology. We estimate mean meta-technical efficiencies of 72.5% and 57.4% for adopters and non-adopters, respectively, which translate into a statistically significant managerial performance differential of approximately 15% points. Therefore, adoption of the RiceAdvice app enhances the production possibilities and managerial performance of rice farmers in the SRV. Efforts at mainstreaming the app in regular extension as well as reducing barriers to app access through a sustainable business model may help increase the impacts.

Beverly, Josh; Stewart, Shamar L.; Neill, Clinton L.

doi: 10.1007/s00181-025-02770-9pmid: N/A

The efficacy of economic development policies in supporting struggling regions, like West Virginia, often depends on the relationship between the labor force participation rate (LFPR) and unemployment rate (UR). Policies aimed at raising wages, providing unemployment benefits, and implementing employment protections might increase long-term unemployment and perpetuate economic hardship (Layard et al. 2005). This study investigates the cointegration between LFPR and UR, considering structural breaks, to understand the dynamics between these two labor market indicators in West Virginia. Analyzing monthly data from 1976 to 2022, we find that the Unemployment Invariance Hypothesis (UIH) is valid for West Virginia. This means that significant financial investments, various economic development initiatives, and temporary increases in labor force participation due to economic shocks counterbalance the persistent discouraged worker effect (DWE). Consequently, West Virginia should focus on long-term strategies prioritizing job creation and reintegrating individuals who have exited the workforce. Such an approach can foster economic growth and break the region’s economic distress cycle.

Yang, Chih-Hai; Tsou, Meng-Wen

doi: 10.1007/s00181-025-02774-5pmid: N/A

This study investigates how a labor cost shock, the implementation of the labor contract law (LCL), impacts export propensity and composition in China. Using a firm-level panel dataset from 2004 to 2013, we find that LCL has an overall negative impact on firms’ export propensities. This negative impact is heterogeneous; it applies mainly to domestic firms, whereas the export propensity of foreign-invested enterprises (FIEs) remains unchanged because they are more productive and capable of mitigating this shock. Further analysis of a firm–customs matched dataset shows that exporters adjust their export compositions in response to labor cost shocks. Surprisingly, exporters increase their processing export ratios, while this adjustment applies mainly to indigenous exporters and FIEs. To respond to this shock, FIE exporters adjust their export composition by increasing the share of exports to advanced markets in total exports, and the number of export products and destinations in the post-LCL period. These patterns of export composition adjustments are also observed among domestic exporters, except for an increasing variety of export products.

Jönsson, Kristian

doi: 10.1007/s00181-025-02765-6pmid: N/A

Methods for decomposing aggregate time series into trend and cycle components are frequently used in macroeconomics. When choosing which method to employ for this purpose, revision properties are often considered. In this article, the trend/cycle decomposition methods suggested by Hodrick and Prescott (1997) and by Hamilton (2018) are compared with respect to their revision properties at different time-series sample positions. Considering revisions for different sample positions individually, without aggregating into a summary statistic for the entire sample, can nuance results. It is shown that the filters have distinctly differing real-time revision properties that vary considerably across sample positions. While the investigated revision properties are worse for the HP filter during an initial period when more data become available, the Hamilton filter’s properties degrade slowly over time and tend to eventually become worse than those of the HP filter when more observations have become available. These nuances are not possible to trace out when investigating revision properties using methods that do not account for properties at specific sample positions. The results imply that which decomposition method is preferable in terms of real-time uncertainty depends on what profile of instability is deemed least problematic for the empirical situation under consideration. As a consequence, choosing between the two filters becomes an important trade-off with respect to the filters’ revision properties in the light of the specific task at hand and the preferences of the practitioner.

de Olivindo, Maria Thalita Arruda Oliveira; Ferreira, Roberto Tatiwa; da Costa Campos, Rodolfo Herald

doi: 10.1007/s00181-025-02776-3pmid: N/A

This paper proposes a central bank (CB) credibility index and investigates changes in the conduct of Brazilian monetary policy between 2002 and 2021. According to Blinder (2000), the CB builds its credibility by pursuing and achieving its goals. We use a Taylor Rule to estimate the time-varying probability of the CB’s reaction to maintaining the agents’ inflation expectations towards the announced target. This probability provides our credibility index, which has correlation coefficients around 0.95, 0.90, 0.95 and 0.93 with the indexes of Cecchetti and Krause (Federal Reserve Bank St. Louis Rev 84:99–117, 2002. https://doi.org/10.20955/r.84.47-60), De Mendonça (Appl Econ (20):2599–2615, 2007. https://doi.org/10.1080/00036840600707324), De Mendonça and Guimarães e Souza (Econ Model 26(6), 1228–1238, 2009. https://doi.org/10.1016/j.econmod.2009.05.010) and Levieuge et al. (Rev World Econ 154:493–535, 2018. https://doi.org/10.1007/s10290-018-0308-6), respectively. Furthermore, it reflects the main stylized facts about changes in Brazilian monetary policy. Between 2002 and 2008, the Central Bank of Brazil (BCB) acts consistently and persistently to maintain price stabilization. However, after the 2008 international crisis the BC focuses on the output gap and acts in a discretionary way to combat inflation. As of 2016, evidence points to a new change in Brazilian monetary policy, which once again reacted firmly to maintain price stability.