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Article

Md Nasir Uddin and Saran Sarntisart

The purpose of this paper is to find the effects of human capital inequality on economic growth.

Abstract

Purpose

The purpose of this paper is to find the effects of human capital inequality on economic growth.

Design/methodology/approach

Thailand Labor Force Survey has been used to generate provincial average years of schooling and Gini coefficient of years of schooling for the years 1995‒2012. Econometric techniques have been employed to identify the effects of human capital inequality on economic growth.

Findings

Economic growth is inversely affected by the distribution of human capital in Thailand. The coefficient of human capital inequality suggests that if Gini coefficient increases by 0.01 points, gross provincial product (GPP) decreases by about 2 percentage points in the long run. However, the effect of average years of schooling in GPP is not significant.

Research limitations/implications

There is a lack of strong theoretical background for the relationship between human capital inequality and economic growth to support the empirical study.

Practical implications

The findings of the study help to design and evaluate education policies in developing countries like Thailand and other low- and middle-income countries.

Originality/value

This paper is among the first attempts to analyze the effect of human capital inequality on economic growth with sub-national level annual data. In addition, it considers cross sectional dependence in panel model.

Details

International Journal of Social Economics, vol. 46 no. 7
Type: Research Article
ISSN: 0306-8293

Keywords

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Article

Murat Guven, Eyup Calik, Basak Cetinguc, Bulent Guloglu and Fethi Calisir

This study aims to investigate the effects of flight delays, distance, number of passengers and seasonality on revenue in the Turkish air transport industry.

Abstract

Purpose

This study aims to investigate the effects of flight delays, distance, number of passengers and seasonality on revenue in the Turkish air transport industry.

Design/methodology/approach

The domestic return routes of a Turkish airline company were examined to address this issue. Among five cities and six airports, 14 major domestic return routes were selected. The augmented mean group (AMG) estimator and common correlated effects mean group (CCEMG) estimator were conducted with a two-way fixed effects (FE) robustness test in this study.

Findings

The results show that arrival flight delay and departure flight delay had negative effects on revenue, whereas the distance between airports, the number of air passengers and seasonality had positive effects on revenue.

Research limitations/implications

The data used in this study were retrieved from a Turkish airline company; for future research, other airline companies operating in Turkey may be included.

Practical implications

These findings could be evaluated by air transportation leaders to provide a guide to make strategic decisions to achieve greater performance in this competitive environment.

Originality/value

The originality of the paper comes from the facts that besides distance and number of passengers, the authors control for the seasonality when assessing the effects of flight delay on revenue; they use panel data techniques, which permit them to control for individual heterogeneity, and create more variability, more efficiency and less collinearity among the variables; they use two recent panel data techniques, CCEMG and AMG, allowing for cross-section dependence.

Details

Kybernetes, vol. 48 no. 9
Type: Research Article
ISSN: 0368-492X

Keywords

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Article

Shruti Shastri

The purpose of this study is to revisit the twin deficit hypothesis (TDH) and provide insights into the transmission mechanism connecting budget deficits and current…

Abstract

Purpose

The purpose of this study is to revisit the twin deficit hypothesis (TDH) and provide insights into the transmission mechanism connecting budget deficits and current account deficits for five major South Asian countries, namely, India, Bangladesh, Pakistan Sri Lanka and Nepal for the period 1985-2016.

Design/methodology/approach

This study uses a multivariate framework including real interest rate, real exchange rate and real gross domestic product to avoid the possibility of incorrect inferences caused by omission of relevant mediating variables. The long-run relationship and causality are investigated through the autoregressive distributed lag bounds testing approach and Toda Yamamoto approach, respectively, for each individual country. The robustness of the results is assessed with the help of Westerlund’s cointegration test and group mean fully modified ordinary least squares (GM-FMOLS), group mean dynamic ordinary least square (GM-DOLS) and common correlated effect mean group (CCEMG) estimators in the panel framework.

Findings

Both time series and panel evidences indicate long-run relationship between budget balance (BB) and current account balance (CAB) together with the mediating variables. The results indicate bi-directional causation between the two balances for India and Bangladesh, TDH for Pakistan and Sri Lanka and the reverse causation from CAB to BB for Nepal. Regarding the transmission mechanism, the results indicate the absence of the causal chain postulated by Mundell–Fleming, which predicts that BB causes CAB via interest rate and exchange rate. A CCEMG estimate of the import demand function reveals a positive government spending elasticity of imports suggesting that BB affects CAB by direct impact through demand.

Originality/value

This study augments the twin deficit literature on South Asian countries by providing insights into the transmission mechanism connecting the BB and CAB. Moreover, the study provides robust evidences on the TDH by using both time series and panel data techniques.

Details

Indian Growth and Development Review, vol. 12 no. 3
Type: Research Article
ISSN: 1753-8254

Keywords

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Article

Ismail Ben Douissa and Tawfik Azrak

Causality between corporate financial performance (CFP) and corporate social performance (CSP) has been extensively debated in previous research works; however, little…

Abstract

Purpose

Causality between corporate financial performance (CFP) and corporate social performance (CSP) has been extensively debated in previous research works; however, little research has been done to investigate the long-run dynamics between these two constructs. The purpose of this paper is to enrich the CFP–CSP literature by estimating the long-run equilibrium relationship between financial performance and social performance in the banking sector in the Gulf Cooperation Council countries over the period 2009–2019.

Design/methodology/approach

The paper adopts an approach that is primarily used in financial economics: first, the authors perform panel long-run Granger causality following Canning and Pedroni’s procedure to indicate the direction of the causal relationship. Second, the authors estimate an error correction model using Chudik and Pesaran’s (2015) dynamic common correlated effects mean group estimator to determine the sign of the relationship.

Findings

The present research findings prove the existence of a long-run equilibrium relationship between CFP and CSP, while indicating at the same time that panel Granger causality runs positively from CSP to CFP, which means that changes in CSP produce lasting changes in CFP.

Practical implications

The findings of the paper would guide strategists to build fit for purpose corporate social responsibility (CSR) strategies in their firms and establish a continuous investment in CSR activities in the long run rather than harshly investing in CSR activities in the short run.

Originality/value

To the best of the authors’ knowledge, this paper is the first one to address heterogeneity in long-run Granger causality tests to estimate the relationship between CSP and CFP.

Details

Social Responsibility Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1747-1117

Keywords

Content available
Article

Duy-Tung Bui

The purpose of this paper is to investigate the problem of fiscal sustainability for a panel of developing Asian economies.

Abstract

Purpose

The purpose of this paper is to investigate the problem of fiscal sustainability for a panel of developing Asian economies.

Design/methodology/approach

In this study, cross-section dependence and heterogeneity are controlled while estimating the fiscal reaction function, which shows how governments react to the accumulation of public debt. The study employs the common correlated effects mean group estimator in Pesaran (2006) for a panel of 22 developing Asian economies for the period 1999‒2017.

Findings

It is found that the fiscal sustainability issue in the region is not so benign as in previous studies. Overall, fiscal policy is unsustainable, even for the nonlinear fiscal rule. Country-specific long-run coefficients are also examined in the study.

Research limitations/implications

The findings show that many developing economies in the region could not satisfy the intertemporal budget constraint, which raises concerns about debt sustainability in the area, especially for the post-crisis period.

Originality/value

This study investigates whether governments can maintain the sustainability of public finances in the long-run, if the ratios of public debt over GDP and primary deficit over GDP continue their recent problematic trends. Another novelty is controlling for heterogeneous effects among the countries in the region to give a more precise picture of debt sustainability. The empirical evidence also supports that insolvency risk can occur at low levels of public debt.

Details

Journal of Asian Business and Economic Studies, vol. 27 no. 1
Type: Research Article
ISSN: 2515-964X

Keywords

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Article

Chandan Sharma

This study aims to examine the relationship between exchange rate risk and export at commodity level for the Indian case.

Abstract

Purpose

This study aims to examine the relationship between exchange rate risk and export at commodity level for the Indian case.

Design/methodology/approach

The monthly panel data used for analysis are at a disaggregated level, which cover around 100 products, encompassing all merchandize sectors for the period spanning from 2012:12 to 2017:11. To measure the exchange rate volatility, the authors use real as well as nominal exchange rate concepts and predict the volatility of exchange rate using the autoregressive conditional heteroscedastic-based model. They use pooled mean group, mean group and common correlated effects mean group estimator that is suitable for the objectives and data frequency.

Findings

The empirical analysis indicates both short- and long-term negative effects of exchange rate variations on exporting. Specifically, in the long run, real exchange rate as well as nominal exchange rate volatility has significant effects on export performance, yet, the effects of uncertainty of nominal exchange rate is much severe and intense. In the short run, it is the nominal exchange rate uncertainty that hurts exports from India. Nevertheless, the short-run effect is much lesser than the long-run, supporting the argument that the short-term exchange rate risk can be hedged, at least partially, through financial instruments; however, uncertainty of the long-term horizon cannot be hedged easily and cost-effectively.

Practical implications

Reducing uncertainty and attaining stability in exchange rate and price level should be an important policy objective in developing countries such as India to achieve higher export growth, both in the short and long run.

Originality/value

Unlike previous studies, this paper tests the relationship using micro-level data and uses advanced econometric techniques that are likely to provide more precise information regarding the association between exchange rate volatility and trade flows.

Details

Journal of Financial Economic Policy, vol. 12 no. 1
Type: Research Article
ISSN: 1757-6385

Keywords

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Article

Waliu Olawale Shittu and Norehan Abdullah

The purpose of this paper is to examine the relationship among fertility, female education and female labour participation in ASEAN-7 countries: Malaysia, Indonesia…

Abstract

Purpose

The purpose of this paper is to examine the relationship among fertility, female education and female labour participation in ASEAN-7 countries: Malaysia, Indonesia, Brunei, Myanmar, the Philippines, Vietnam and Thailand, between 1990 and 2015. The choice of these countries is informed by their economic, social and political importance in the ASEAN Bloc; while Indonesia boasts of the largest population in ASEAN, Brunei and Malaysia boast of relatively advanced economies, in GDP terms.

Design/methodology/approach

Pesaran’s test of panel unit root in the presence of cross-sectional dependence was employed to test for the stationarity properties of the series. The dynamic long-run coefficients of the variables were examined using the pooled mean group, common correlated effect and dynamic OLS techniques, while the Granger causality test was used to estimate the direction of causality among the variables.

Findings

The findings indicate that there is both negative and positive relationship between fertility and labour force participation, with causality running from labour force participation through fertility – on the one hand, and between education and labour force participation, with no causality between the two – on the other hand.

Research limitations/implications

The study, therefore, upholds the role incompatibility and societal response hypothesis, as well as human capital and opportunity cost theories.

Practical implications

The appropriate policies are those that gear the countries’ fertility decisions towards the societal response hypothesis in order to enhance human capital development and increase productivity. This implies that the governments of ASEAN-7 countries should ease hindrances on a balanced combination of family-care and workforce participation on married women in view of the gender-wage gap created by female work apathy, which largely reduces domestic productivities. Appropriate policies in this direction include rising availability and affordability of childcare facilities, incentives for women higher education, attitudinal changes towards job-participating mothers, as well as legislated paid parental leaves which have balanced the, hitherto, incompatibility between work and childbearing.

Originality/value

Except for Abdullah et al. (2013), the authors have no knowledge of other authors who have worked on this relationship in the chosen ASEAN countries. This study is, however, an improvement upon that of Abdullah et al. (2013) in different ways, one of which is that it considers seven ASEAN countries, thus making the results more valid representation of the ASEAN Bloc. Furthermore, the Pesaran (2007) technique of unit root testing has not been found in any recent literature on the subject-matter. This technique, being a second-generation test, tests variable unit root in the presence of cross-sectional dependence.

Details

International Journal of Social Economics, vol. 46 no. 1
Type: Research Article
ISSN: 0306-8293

Keywords

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Article

Arlyana Abubakar, Agung Bayu Purwoko, Hesti Werdaningtyas, Sulistiyo Kadam Ardiyono and Frida Yunita Sinurat

This study aims to examine how crude palm oil (CPO) price impacts corporate default risk (CDR) of agricultural firms in Indonesia’s palm oil industry.

Abstract

Purpose

This study aims to examine how crude palm oil (CPO) price impacts corporate default risk (CDR) of agricultural firms in Indonesia’s palm oil industry.

Design/methodology/approach

By applying a dynamic panel regression on listed CPO-based firms, the authors find that CPO price fluctuations are insignificant in explaining CDR.

Findings

The main determinants of CDR are internal factors, namely, excess stock market returns and return on assets. External factors do not play any role in influencing the CDR in the case of Indonesia. The results highlight the importance of completing risk analysis at the macro level with firm-specific factors.

Research limitations/implications

The contributions aside, an important limitation of this study is that there is a small sample of listed firms. Most of these firms have the ability to mitigate risks. Therefore, further studies are needed to identify the default predictions for non-listed firms.

Practical implications

In the context of macro prudential policy in Indonesia, the findings imply that financial stability surveillance needs to be carried out in two areas: macroeconomic indicators and firm-specific indicators. Given the lack of listed CPO firms in Indonesia, the object of surveillance should focus on not only listed firms but also non-listed firms with large bank loans.

Originality/value

This study highlights the importance of completing risk analysis at the macro level with firm-specific factors in Indonesia as commodity exporting country.

Details

Studies in Economics and Finance, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1086-7376

Keywords

Content available
Article

Meta Ayu Kurniawati

This study examines the causal relationship between information communication technology (ICT) and economic growth in high-income and middle-income Asian countries.

Abstract

Purpose

This study examines the causal relationship between information communication technology (ICT) and economic growth in high-income and middle-income Asian countries.

Design/methodology/approach

This study utilises a high-quality data from 25 Asian countries from 2000 to 2018. This study presents the robustness results by employing panel cointegration and estimation procedures to account for the endogeneity and cross-sectional dependence issues.

Findings

The results illustrate that high-income Asian countries have achieved positive and significant economic development from high Internet penetration. Additionally, the middle-income countries have started to benefit from ICT Internet. The findings show that the telephone line and mobile phone penetration is highly capable of promoting economic growth in middle-income Asian countries.

Practical implications

In high-income Asia countries, an appropriate ICT infrastructure policy will support feasible ICT penetration, which may drive the processes of economic development and innovation that contribute to economic growth. Moreover, in middle-income Asian countries, the establishment of better-quality ICT service and infrastructure is more critical. Policymakers should accommodate sufficient support to establish the ICT infrastructure and expand ICT penetration.

Originality/value

This study reveals that high-income Asian countries have been more proactive and effective than middle-income countries in embracing ICT to foster economic growth. Examining the case of high-income and middle-income Asian countries provides comprehensive insight for policymakers regarding the relevance of ICT in boosting economic growth through the advantages of technology expansion.

Details

Journal of Asian Business and Economic Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2515-964X

Keywords

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Book part

Alexander Chudik, Kamiar Mohaddes, M. Hashem Pesaran and Mehdi Raissi

This paper develops a cross-sectionally augmented distributed lag (CS-DL) approach to the estimation of long-run effects in large dynamic heterogeneous panel data models…

Abstract

This paper develops a cross-sectionally augmented distributed lag (CS-DL) approach to the estimation of long-run effects in large dynamic heterogeneous panel data models with cross-sectionally dependent errors. The asymptotic distribution of the CS-DL estimator is derived under coefficient heterogeneity in the case where the time dimension (T ) and the cross-section dimension (N ) are both large. The CS-DL approach is compared with more standard panel data estimators that are based on autoregressive distributed lag (ARDL) specifications. It is shown that unlike the ARDL-type estimator, the CS-DL estimator is robust to misspecification of dynamics and error serial correlation. The theoretical results are illustrated with small sample evidence obtained by means of Monte Carlo simulations, which suggest that the performance of the CS-DL approach is often superior to the alternative panel ARDL estimates, particularly when T is not too large and lies in the range of 30–50.

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