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This paper seeks to examine the validity of Wagner's Law using annual data (1957‐2006) for the US state‐local government (SLG) real expenditure and eight of its sub‐categories.
Abstract
Purpose
This paper seeks to examine the validity of Wagner's Law using annual data (1957‐2006) for the US state‐local government (SLG) real expenditure and eight of its sub‐categories.
Design/methodology/approach
The co‐integration tests of Johansen and the bounds testing approach to co‐integration proposed by Pesaran et al. were carried out to determine whether a long‐term equilibrium relationship existed between real per capita GDP (pcgdp) and the expenditure variables scaled by real GDP. The income elasticity coefficients of the expenditure variables were then estimated. The direction of causality was tested in the context of error‐correction models (ECM) and the Toda‐Yamamoto approach, which allows for estimating level relationships without pre‐testing for unit roots.
Findings
Most SLG expenditure variables were found to be non‐stationary and income‐elastic. However, with the exception of total expenditure (te), insurance trust benefits (ins) and social services and income maintenance (ssim), no other non‐stationary expenditure variable was co‐integrated with pcgdp and error‐corrected over time. The ECM results suggested that te, ins and ssim were driven by pcgdp, consistent with a Wagnerian causal ordering. The Toda‐Yamamoto approach, however, indicated that in these and a few other cases the causal effect was bidirectional.
Originality/value
This paper provides a fairly comprehensive test of Wagner's Law at the US sub‐national government level with an emphasis on the concepts of co‐integration and (long‐run) causality in the income‐expenditure nexus. Its findings underscore the importance of using disaggregated expenditure measures to test Wagner's Law, as they suggest that some, but not all, rapidly growing and non‐stationary expenditure sub‐categories were decoupled from pcgdp in the long run.
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Ramesh Chandra Das and Bankim Chandra Ghosh
The initiative from the world economic community to integrate different types of economies was globalization that ensured free flow of goods and services, it is popularly known as…
Abstract
The initiative from the world economic community to integrate different types of economies was globalization that ensured free flow of goods and services, it is popularly known as trade openness. The extension of this effort was to cover the flow of financial capital across the economies in terms of net foreign direct investment and foreign portfolio investment, the combination of these types of capital flow is called financial integration (FI). The primary objective of the policies of globalization and FI was to boost up the global as well as country-specific growth rates. Although a list of works is there in the literature on the related fields for different country or group levels, it is hardly to find such works in the highly emerging economies of the world. This study has strived to investigate whether globalization and FI at all influence the growth of incomes of the commonly accepted three top emerging economies, Brazil, China, and India. This study uses unit roots test, Johansen cointegration test, and causality test in a VAR setup for the period 1990–2016 to find long-run associations and short-run dynamics among the variables. It reveals that all the four indicators have long-run associations for the three countries but the errors are corrected for Brazil and China only. However, only for China, the FI and globalization factors have made a cause to PCGDP; no such causal relations are observed for Brazil and India.
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Aviral Kumar Tiwari and K.G. Suresh
This study aims to examine the stationarity characteristics of per capita GDP of 17 Asian countries and subpanels for South Asia, East Asia, and high income Asian countries in…
Abstract
Purpose
This study aims to examine the stationarity characteristics of per capita GDP of 17 Asian countries and subpanels for South Asia, East Asia, and high income Asian countries in nonlinear framework.
Design/methodology/approach
The authors employed a recently developed nonlinear panel unit root test suggested by Ucar and Omaga in PESTAR framework for full panel and the subpanels.
Findings
The results indicate that per capita GDP for the full panel of Asian countries and panel of South Asian countries are linear nonstationary, whereas for the panel of East Asia and high income developed countries have a nonlinear data generating process and are stationary.
Originality/value
The use of newly developed nonlinear panel unit root test for Asian countries is the main contribution of the study. In that aspect, this is the first study to employ such a test in this area.
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Kishan Agarwal, Sharmi Sen, Ghirmai Tesfamariam Teame and Tonmoy Chatterjee
Issues related to economic development and growth are oft discussed to illustrate the health of a nation. However, such development is constrained by the inequality parameter of…
Abstract
Issues related to economic development and growth are oft discussed to illustrate the health of a nation. However, such development is constrained by the inequality parameter of the representative society. Again, economic fluctuations arising from several crises may hinder the representative nation from getting on a smooth path to development. Now, augmentation of crises along with the presence of inequality may trigger economic vulnerabilities, leading to unsustainable economic development. Against this backdrop, we initially frame a theoretical model to capture the above-mentioned issues and try to derive plausible economic interpretations for the same. To verify the same in a more robust manner, we consider a panel of 30 developing countries from Africa, spanning the time period 1980–2020. Both the health status and the education status of our panel of countries are used to explore the sustainability issue in the presence of income inequality. All data have been collected from the World Development Indicators (WDI) and Standardized World Income Inequality Database (SWIID) (Table 21.1
Variables | Description |
---|---|
PCGHE | Domestic General Government Health Expenditure Per Capita (Current US$) |
PCPHE | Domestic Private Health Expenditure Per Capita (Current US$) |
PCOPE | Out-of-Pocket Expenditure Per Capita (Current US$) |
LE | Life Expectancy at Birth, Total (Years) |
IMR | Mortality Rate, Infant Per 1,000 Live (Birth) |
GEE | Government Expenditure on Education, Total (% of GDP) |
PSE | School Enrolment, Primary (% gross) |
SSE | School Enrolment, Secondary (% gross) |
PCGDP | GDP Per Capita (Current US$) |
GRCGDP | GDP Per Capita Growth (Current US$) |
FDI | Foreign Direct Investment, Net Inflow (% of GDP) |
POP | Population, Total |
GINI | Gini Index of Net Income Inequality |
Variables Description.
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Nilendu Chatterjee and Tonmoy Chatterjee
The world has witnessed rapid changes as far as growth and convergence of economies are concerned. Over the past decades, many less-developed or developing economies have been…
Abstract
The world has witnessed rapid changes as far as growth and convergence of economies are concerned. Over the past decades, many less-developed or developing economies have been catching up with the industrialized economies; a few have even surpassed them, as far as growth is concerned. Also there have seen emergence of new economic powers in the world, where growth rates of these upcoming economies have not only converged with that of developed economies, but have gone ahead of them as well. In this chapter, by the help of beta convergence and sigma convergence, an attempt has been taken to find out the nature and causes of convergence among few developed and developing economies in the last three decades, that is, after 1990, which also covers the period of post-globalization in these developing nations. Main concerned variables are Per-capita GDP, Life expectancy at birth and Foreign Direct Investment. Such analysis would help to find how far globalization has been effective or helpful to the developing economies, as far as catching up with developed economies is concerned. The results suggest that in the post-globalization era, nations have been converging both absolutely as well as conditionally and the variance is also diminishing, which indicates the presence of sigma convergence as well.
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The purpose of the paper is to investigate whether, and, if so, to what extent, the valuation that nations place on individual personality traits change with economic growth and…
Abstract
Purpose
The purpose of the paper is to investigate whether, and, if so, to what extent, the valuation that nations place on individual personality traits change with economic growth and development.
Design/methodology/approach
The paper compares the averages of the cross‐country valuations of eight different personality characteristics for various levels of development, and, in addition, employs cross‐country regression analysis to assess the impact of economic growth on the value placed on these characteristics.
Findings
In general, the findings of both the comparative analysis and the cross‐country regression analysis indicate that the valuation counties place on individual personality characteristics change with economic growth and development, and for certain characteristics, rather dramatically.
Research limitations/implications
A major implication of the findings of the paper is that economic growth may not just act in a neutral fashion by merely providing additional material goods, but may have profound effect on future national identity, on the definition of the type of individual that a nation values.
Practical implications
Since economic growth changes the way personality characteristics are valued by a nation, it is possible that the growth process itself can alter the future growth prospects of a nation, because some personality characterizes are apt to be growth fostering, while others are likely to be growth inhibiting.
Originality/value
The paper should be of interest to anyone interested in the changes brought about by growth and development.
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Suryakanta Nayak and Dukhabandhu Sahoo
The aim of this study is to examine the impact of foreign direct investment (FDI) inflow and information and communication technology (ICT) on the economic performance of India by…
Abstract
Purpose
The aim of this study is to examine the impact of foreign direct investment (FDI) inflow and information and communication technology (ICT) on the economic performance of India by analysing annual data from 1991 to 2019.
Design/methodology/approach
This study has used data collected from secondary sources. The variables considered for the analysis are based on the review of theoretical and empirical literature. Moreover, apart from the quantitative variables, two qualitative variables have also been considered through the use of dummy variables. The Cobb–Douglas, Transcendental logarithmic and Simultaneous equations models have been used for the study.
Findings
The result reveals that the partial elasticities of the per-capita gross domestic product (PCGDP) of India with respect to FDI, mobile density (MD) and internet density (ID) are 0.074, 0.024 and 0.036, respectively. The positive and significant coefficient of the interaction among FDI, MD and ID in the estimation of the transcendental logarithmic function indicates the importance of ICT infrastructure in extracting the best out of FDI (the coefficient is 0.011 for the model without any control variables and it is 0.005 with control variables).
Originality/value
The findings of this study are more reliable as the latest available data have been analysed through the appropriate econometric models. This study will be useful for the policymakers in the formulation of policies with regard to foreign capital and digitalisation.
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Ghada H. Ashour, Mohamed Noureldin Sayed and Nesrin A. Abbas
This research aims to examine the macro determinants that significantly affect financial development in the Middle East and North Africa (MENA) region, which could be used…
Abstract
Purpose
This research aims to examine the macro determinants that significantly affect financial development in the Middle East and North Africa (MENA) region, which could be used furtherly to play a major role in economic sustainability since one of the major driving forces for economic development is the financial development.
Design/methodology/approach
The significant determinants of financial development should be efficiently used by the MENA region countries for creating huge financial sector development and innovation, stimulating economic development in turn and leading to the completion of the cycle of development and sustainability. To achieve this study's objective, the researcher employed a quantitative method to develop an econometric model.
Findings
This model consisted of two Panel EGLS Cross-Section Random Effects Models (REMs) in which Domestic credit to the private sector as a percentage of GDP (?PCGDP?_it) and stock market capitalization ratio (?SMC?_it) were taken as the dependent variables. In addition, the independent variables included the corruption perception index, financial freedom (FF), political stability (PS) and trade openness (TO). The researcher extracted the data for the analysis from different databases including the World Bank, the Organization for Economic Cooperation and Development and the International Monetary Fund. Throughout the first – Panel EGLS Cross-Section Random Effects Model, it turned out that, while FF, TO and corruption index had a positive relationship with ?PCGDP?_it, PS had an adverse effect on ?PCGDP?_it. The second – Panel EGLS Cross-Section Random Effects Model showed that, while PS and TO had a positive effect on stock market performance, the corruption index and FF had an adverse effect on stock market performance.
Originality/value
Throughout the first – Panel EGLS Cross-Section Random Effects Model, it turned out that, while FF, TO and corruption index had a positive relationship with ?PCGDP?_it, PS had an adverse effect on ?PCGDP?_it. The second – Panel EGLS Cross-Section Random Effects Model showed that, while PS and TO had a positive effect on stock market performance, the corruption index and FF had an adverse effect on stock market performance.
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This study aims to apply two recently discovered relationships that describe fertility recovery in developed countries to East Asia: the U-shaped relationship between fertility…
Abstract
Purpose
This study aims to apply two recently discovered relationships that describe fertility recovery in developed countries to East Asia: the U-shaped relationship between fertility and FLP (female labor participation) and the inverse-J-shaped relationship between fertility and income.
Design/methodology/approach
It uses a panel data set of 176 countries including 13 East Asian countries from 1990 to 2014. Pooled ordinary least squares, fixed-effects and random-effects models are tested.
Findings
The main findings are the following points concerning East Asia: The U-shape and the inverse-J-shape are confirmed, suggesting that fertility recovery could be realized if both FLP and income are high enough and increasing; in the region, the U-shape is peculiar. Lower-income countries’ data move from the upper-right to the bottom, whereas higher-income countries’ data move from the upper-left to the bottom; no country in the region has reached the stage where both FLP and income are high enough.
Originality/value
This is the first paper on East Asia to show the U-shape and the inverse-J-shape concerning fertility recovery and the peculiarity of the U-shape in East Asia. It explains the background of low fertility using the relationship between fertility, FLP and income.
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Biplob Kumar Nandi, Gazi Quamrul Hasan and Md. Humayun Kabir
This study aims to examine the impact of financial inclusion on per capita gross domestic product (GDP) at varying degrees of financial inclusion for a sample of 76 developing…
Abstract
Purpose
This study aims to examine the impact of financial inclusion on per capita gross domestic product (GDP) at varying degrees of financial inclusion for a sample of 76 developing countries between 2011 and 2017. To evaluate the heterogeneous impact, this paper constructs the multi-dimension index of financial inclusion to classify sample countries into two sub-samples in terms of the value of FIID, taking account of three dimensions of financial inclusion: access, usage and availability.
Design/methodology/approach
This study attempts to identify the presence of reverse causality and long-run relationship between financial inclusion and economic growth by using the Granger causality test (Wald test) and three alternative panel cointegration tests (Kao Test, Pedroni Test, Westerlund Test) respectively. Because of the existence of the bi-directional causality between financial inclusion and per capita GDP, this study uses a fixed effect instrumental variable model with lagged dependent variable to get unbiased estimators from the panel regressions for sample countries.
Findings
This paper finds a strong positive impact of financial inclusion on per capita GDP growth in sample developing countries, controlling for labor market structure, financial institutions’ efficacy, infrastructural and governance issues. This study suggests that economic growth will be high in developing economies with a higher level of financial inclusion; however, the positive impact for two sub-samples countries (low and medium level of inclusion and high level of inclusion) are heterogeneous. The estimated result explains that a 1% increase in the financial inclusion index leads to a 0.0153% point increase in the per capita GDP for the countries with a low and medium level of financial inclusion, while this positive impact is significantly higher, 0.0794% point for countries with the high level of financial inclusion. This study also suggests that the higher concentration in the financial market by few agents and the lower level of governance may have an adverse impact on economic growth for the economies with a low and medium level of financial inclusion.
Originality/value
This study is an original study that contributes to the research gap by explaining the heterogeneous impact of financial inclusion on economic growth at varying degrees of inclusion in the two sub-sample countries. Moreover, this study posits greater appeal as it explores the issue using the sample of only developing economies.
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