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The authors test the effect of expenditure decentralization and fiscal equalization on short- and long-run economic growth and estimate two-step generalized method of moment (GMM) simultaneous equations models, using panel data for China and India for the period 1985 to 2005. The authors estimate two simultaneous equations: a growth equation and equalization equation and find that expenditure decentralization has a negative and statistically significant effect at conventional levels on short-run economic growth for both China and India. However, the authors also find that this result is sensitive to the set of included explanatory variables. This leads the authors to conclude that expenditure decentralization has no effect on short-run economic growth for either country. The authors also find that expenditure decentralization has a positive and statistically significant effect on fiscal equalization for both countries but find no evidence that fiscal equalization affects short-run economic growth for either China or India. In contrast, the authors find that expenditure decentralization has a positive effect on long-run economic growth in the case of India, but not in the case of China. Finally, the authors report evidence that fiscal equalization has no effect on long-run economic growth in the case of China; however, the authors find that equalization has a positive and statistically significant at conventional levels effect on long-run economic growth in India.

The authors estimate two-step GMM simultaneous equations models, using panel data for China and India for the period 1985 to 2005. To examine the effect of fiscal decentralization (FD) policies on economic growth in China and India, the authors estimate two equations: a growth equation and an equalization equation. For the growth equation, the authors adopt a production-function-based model that is widely used in the empirical literature on growth; however, the authors do make some compromises with this specification due to the unavailability of certain data. For the equalization equation, the authors include variables that economic theory and empirical evidence suggest influence fiscal disparities among subnational governments which in turn influence the demand for horizontal fiscal equalization (HFE). To the extent possible, the authors employ the same econometric specification, variable constructions and sample periods for both China and India. The authors believe this strategy provides a more rigorous test of the FD hypothesis.

The authors find that expenditure decentralization has a negative and statistically significant effect at conventional levels on short-run economic growth for both China and India. However, the authors also find that this result is sensitive to the set of included explanatory variables. This leads to conclude that expenditure decentralization has no effect on short-run economic growth for either country. The authors also find that expenditure decentralization has a positive and statistically significant effect on fiscal equalization for both countries but find no evidence that fiscal equalization affects short-run economic growth for either China or India. In contrast, the authors find that expenditure decentralization has a positive effect on long-run economic growth in the case of India, but not in the case of China. Finally, the authors report evidence that fiscal equalization has no effect on long-run economic growth in the case of China; however, the authors find that equalization has a positive and statistically significant at conventional levels effect on long-run economic growth in India.

Due to the importance of FD policies, especially to many developing countries that are currently pursuing decentralization reforms, future research should examine the effect of FD on economic growth for other countries. Furthermore, although it would be difficult to do so, future research should examine whether FD promotes political stability on ethnically diverse countries.

To the best of the authors’ knowledge, no one has examined the effect of FD policies on India's growth experience. What is more is that this is also the first of its kind to have a comprehensive empirical investigation into these two major developing countries with very interesting similarities and differences in FD policies. It is thus of great importance to examine the effect of expenditure decentralization and HFE on economic growth in China and India.

The main purpose of this study is to examine whether economic policy uncertainty affects the stock liquidity. Furthermore, this study explores the influencing factors, transmission mechanism and solution path between economic policy uncertainty and the stock liquidity.

A data set comprising 97,729 firm-quarter observations of Chinese firms with A-shares listed on the Shenzhen and Shanghai stock exchanges was selected, China's economic policy uncertainty was measured by using the China Economic Policy Uncertainty Index and the impact of economic policy uncertainty on the stock liquidity over the period 2004–2017 was empirically tested. The empirical analysis was based on ordinary least square regression model, and mediation and moderation effect models were used in the further analysis.

The empirical results show that the higher the economic policy uncertainty, the lower the stock liquidity, which is more significant in firms with an opaque information environment, less investor attention and weak risk resistance ability. The authors argue that the transmission mechanism can be explained by the quality of information disclosure and investor sentiment. Moreover, the negative impact of economic policy uncertainty on the stock liquidity can be mitigated by increasing voluntary disclosures.

This study enriches the literature on factors affecting the stock liquidity from the perspective of macroeconomic policy and provides a reference for policymakers to formulate relevant measures to improve the stock liquidity in emerging markets.

The purpose of this paper is to investigate whether there is room for a stabilising fiscal policy, through an analysis of the supporters of the new classical economics and the supporters of the new Keynesian economics. There are no reliable results on the Keynesian and non-Keynesian effects of fiscal policies. As such, the policy-mix becomes a problem of theoretical approach, in the sense of a strategic game between monetary authorities and tax authorities (among them). This points to the problem of coordination between budgetary authorities as being the central debate within the Eurozone. The end-result is that without fiscal policy coordination, Eurozone member states are working on a series of non-cooperative games that are inefficient, because no player can improve its position by unilaterally changing its strategy.

The analysis starts from the experience of three countries in the 1980s, these are Denmark, Ireland and Sweden. In all three cases the adoption of restrictive budget policies has provoked a strong, rapid and enduring resizing of public debt, and growth did not weaken, moreover it accelerated. In all three cases the logic behind the policy-mix actions allowed the individualisation of the respective roles of fiscal and monetary policies. Fiscal policies were joining with fiscal instruments and reduction in public spending and furthermore monetary policy was accommodated in respect of the budget contraction.

First, the authors were not able to identify an analytical method that can ensure the success of a fiscal policy. Second, analysing fiscal policies within the Eurozone implies also that the authors reflect on the need for a coordination of these policies. In fact, the authors have shown how the possible coordination of economic policies in the Eurozone would result in major benefits for all member countries.

In the absence of fiscal policy coordination, member states are engaged in a series of non-cooperative games that prove inefficient, when no player is able to improve its position by unilaterally changing its fiscal policy. The coordination of national fiscal policies generates a collective advantage, bringing each state to consistently change its strategies.

This study aims to investigate the coordinated impact of regulations on the predicted probability of a banking crisis in Africa.

The study used the dynamic panel instrumental variable probit regression model of 52 African economies over the period 2006 to 2018.

The authors observe that banking crisis is persistent for few years but dissipates in the long run. The results show that board mechanism and ownership control are important in reducing the likelihood of banking crisis. The authors found a negative impact of regulatory capital and monetary policy on the predicted probability of a banking crisis while regulatory quality was not strong in reducing the likelihood of banking crisis. There was also evidence to support that regulatory capital and monetary policy augment the negative impact of board mechanism and ownership control on the predicted probability of a banking crisis.

The limitation of the study is that it did not explore all measures of regulatory framework and how they impact banking crisis. However, it has an advantage of using alternative measures of regulations in a banking crisis probability model. Therefore, future studies should include other macro-prudential regulations, regulatory environments and supervision and observe how they are coordinated to reduce possible crisis in a robust methodological framework.

The research has policy implications for monetary authorities and policymakers to set coordinated regulations through internal banking mechanisms that are relevant in sustaining banking system stability goals. Countries in Africa should strengthen their quality of regulation in such a way that it can play a strong and complementary role to a robust internal control mechanisms, so as to maintain stability in the banking system. In general, regulators and policymakers should design greater coordination of external and internal regulations through a single regulatory framework and a common resolution mechanism that make the banking system more robust in curbing possible crisis.

The policy implication of the study is to build banking confidence in the society.

This study analyses the interactions of different components of internal and external regulatory framework in helping to reduce the probability of a banking crisis in Africa.

This study investigates empirically the impact of export product concentration (or diversification) on social protection expenditure in both developed and developing countries. The analysis further explores whether this effect depends on countries' degree of openness to international trade.

The analysis has relied on an unbalanced panel data set comprising 112 countries over the period 1980–2010 and used the two-step system generalized methods of moments (GMM) estimator as the econometric approach.

The empirical analysis conveys two messages. First, low-income countries experience a positive effect of export product concentration on social protection expenditure, while for relatively advanced economies, export product diversification positively influences social protection expenditure. Second, countries that further open up their economies to international trade experience a positive effect of export product diversification on social protection expenditure, with the magnitude of this impact increasing as the degree of openness rises.

These findings highlight the relevance of export product diversification for social protection expenditure in both developed and developing countries, notably in the context of greater trade openness.

The diversification of export products is one means for developed and developing countries alike to increase the scope for social protection expenditure.

To the best of the authors' knowledge, this topic had not been addressed.

Using data for a sample of advanced and developing countries, this paper aims to study the responses of monetary growth and the growth of government spending to external spillovers, namely, the growth of exports and imports, movement in the real effective exchange rate and the change in the oil price. The objective is to study movements in domestic policy variables in open economies that are vulnerable to trade and commodity price shocks.

The analysis evaluates correlations between the responses of the policy variables to external spillovers. Further, the analysis studies the effects of indicators of economic performance on domestic policy responses to various shifts across countries.

Higher variability of real and nominal growth increases the fiscal policy response to external spillovers with an aim to stem further variability. Monetary policies appear to be more responsive to trend price inflation with an aim to stem further inflationary pressures. Fiscal policy’s reaction to trend price inflation aims at striking a balance between countering potential inflationary pressures, as well as recessionary conditions attributed to the various spillovers.

Overall, the evidence points to the importance of trade and commodity price shifts to the design of domestic policies. Further indicators of economic performance differentiate the degree of policy responses to trade and commodity price developments with a goal to stem inflationary pressures and reduce aggregate uncertainty.

This study aims to assess the determinants of corporate debt with a particular focus on bank-affiliated and non-bank-affiliated firms during the global financial crisis.

The authors analyse the data of 395 listed manufacturing firms from Pakistan with 2,370 firm-year observations. The sample is divided into subsamples, namely bank-affiliated, non-bank-affiliated and stand-alone firms. Fixed and panel effect regression models are applied to determine the during, pre-crisis and post-crisis effects on corporate capital structure.

The robust results of the study reveal that non-bank-affiliated firms have different leverage determinant behaviours with a greater reliance on size, tangibility and profitability. However, bank-affiliated firms seemed to show greater immunity from a crisis compared to other firms. Simultaneously, the stand-alone firms remained at a disadvantage subject to internal financial ties of group-affiliated firms and form a base of market imperfection.

This study's findings imply that financial managers should contain better ties with financial institutions to enhance financial immunity in worse time of financial crisis or COVID-19 global calamity. On the regulation front, these findings call for critical policy regulations to govern the internal ties with financial institutions to create a level playing field for the corporate sector.

To the best of the authors’ knowledge, this study is the first to investigate determinants of corporate debt with a particular focus on bank-affiliated and non-bank-affiliated firms. This work is also novel to explore corporate debt of bank-affiliated and non-bank-affiliated firms during the financial crisis.

This paper aims to investigate the existing relations between the management of public bonds on the dynamics of debt, term structure of interest rates and economic cycle, through a dynamic stochastic general equilibrium model (DSGE), which was estimated through Bayesian inference techniques using data from Brazil.

The model developed was used to investigate the effects of the public debt average maturity management when the economy faces a monetary policy shock. For this, three management scenarios are evaluated, including Brazilian securities average term.

Contrary to what might be inferred from DSGE models that limited the analysis of the debt term by imposing only one-period bonds, a contractionary monetary policy shock does not necessarily cause public debt to increase significantly. Debt term structure plays a crucial role in this result since the government does not need to roll the debt over at higher costs when the debt term profile is longer, reducing the debt service costs and then the impact on the overall debt.

Despite the relevance of this theme and its implications for the dynamics of the economy, there is still a gap to be filled in the literature when using DSGE models, since most part of the work that used this methodology limited the analysis of the debt term by imposing that government issues only one-period bonds. This paper differs from the others insofar as it promotes an investigation focused on the role played by debt maturity management on the performance of the contractionary monetary policy. This approach can generate a better understanding of debt management policy and its interaction with fiscal and monetary policies.

A city is a spatial carrier of innovation activities. Improving the level of urban innovation can play a significant supporting role in building an innovative country. China began to implement the innovative city pilot policy in 2008 and continued to expand the policy into more areas for exploring the path of innovative urban development with Chinese characteristics and improving urban innovation.

Based on mechanism analysis, this paper used the panel data of 269 cities from 2003 to 2016 to empirically test the effect of the pilot policy on the level of urban innovation by using different methods, such as the difference-in-differences model.

The results show that the innovative city pilot policy significantly improves the level of urban innovation. However, according to the findings of the heterogeneity analysis, the effect of the pilot policy on improving the innovation level in direct-controlled municipalities, provincial capitals and sub-provincial cities is weaker than that in ordinary cities, and the effect of the pilot policy on improving the innovation level in cities with a higher quality of science and education resources is weaker than that in cities with lower quality of science and education resources.

Moreover, as the level of urban innovation increases, the effect of the pilot policy on improving the level of urban innovation is an asymmetric inverted V shape, which means the effect is first strengthened and then weakened. The research also finds that the locational heterogeneity of the pilot policy for improving the level of urban innovation is not notable. In addition, the innovative city pilot policy can strengthen the government's strategic guidance, promote the concentration of talent, incentivize corporate investment and optimize the innovation environment, having a positive impact on urban innovation. Moreover, the effect of concentration of talent and the effect of corporate investment incentive are the important reasons for the pilot policy to promote the improvement of the level of urban innovation.

The purpose of the research is to identify the degree of intensity of barriers to the activities of social enterprises (SEs) and to examine the significance of such barriers regarding the financial situation of SE’s in emerging economies.

The data relates to 200 SEs selected from a national survey of 1,300 Polish non-governmental organizations (NGOs). An analysis of barriers to SEs according to the frequency of their occurrence was conducted. An indicator of the intensity of barriers to the activities of social enterprises and an indicator on these enterprises’ overall financial condition were determined. Spearman rank correlation analysis was used to assess the relationship between the indices.

The results of the study indicate that in addition to excessive bureaucracy in public administration and the complex formalities related to the use of private and public funds, SEs have difficulties in maintaining good staff and volunteers, whereas people in key positions reference burnout, not only among their own employees but also in themselves. These have a significant impact on the financial situation of SEs.

This study contributes to the field of social entrepreneurship in two ways. One is at the macro level in that it provides suggestions for public authorities in emerging economies interested in maintaining SEs in good financial condition so that they can effectively fulfil their social functions. The second contribution – the micro approach – is recognizing the extent of the impact of barriers on the financial condition of SEs and also determining the intensity of such barriers with regard to the mobilization of resources by managers, especially in the field of human resources.