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Showing papers in "International Review of Applied Economics in 2014"


Journal ArticleDOI
TL;DR: In this article, the authors find that the new IMF framework remains insufficient in two main aspects: first, by defining "Capital Flow Management Measures" (CFMs) as a temporary instrument embedded in an overall strategy of financial opening, the organization insists on the general advantages of financial liberalization, which poses serious limits to emerging economies' policy space.
Abstract: As emerging economies experience a boom in capital inflows, governments are increasingly concerned about their downsides. Even the IMF (International Monetary Fund), long a stalwart proponent of financial liberalization, has engaged in a new debate on capital flow management. Drawing lessons from empirical case studies on Brazil and South Korea, this paper finds that the new IMF framework remains insufficient in two main aspects. First, by defining ‘capital flow management measures’ (CFMs) as a temporary instrument embedded in an overall strategy of financial opening, the organization insists on the general advantages of financial liberalization, which poses serious limits to emerging economies’ policy space. Second, the Fund keeps on stressing a separation of prudential financial regulation, which should be permanent, and temporary CFMs. Yet, the case studies presented here show that, especially for emerging markets with rather open and sophisticated domestic financial markets, both types of measures are...

92 citations


Journal ArticleDOI
TL;DR: In this paper, the authors examined the relationship between banks, stock markets and economic growth in South Africa and found that the complementarity between stock market development and bank-based financial development is weak and sensitive to the proxy used to meas...
Abstract: This study examines the relationship between banks, stock markets and economic growth in South Africa. The study attempts to answer one critical question: are stock markets and banks complementary to one another in the process of enhancing economic growth? The complementarity between the stock markets and banks is examined by including a set of interactive terms in a standard growth model, alongside bank development and stock market development proxies. In order to test the robustness of the results, three proxies of stock market development have been used, namely stock market capitalization, stock market traded value and stock market turnover – against the ratio of bank credit to the private sector, a proxy for bank-based financial development. The economic growth is, however, proxied by real GDP per capita. Using the ARDL-Bounds testing procedure, the study finds that the complementarity between stock market development and bank-based financial development is weak and sensitive to the proxy used to meas...

70 citations


Journal ArticleDOI
TL;DR: In this paper, the authors investigated national innovation systems' input-output components and to model a robust efficiency measurement using the DEA Bootstrap technique, whereby they rank the countries based on bias-corrected estimation parallel to conventional DEA efficiency.
Abstract: The goal of this paper is to investigate national innovation systems’ input–output components and to model a robust efficiency measurement using the DEA Bootstrap technique. Most of the previous NIS studies are descriptive and little emphasis is given to complex analysis. In our previous study, we evaluated the innovation performance of 20 emerging and developed countries, from the point of view of technical efficiency. This study makes an important contribution using the DEA Bootstrap technique, whereby we rank the countries based on bias-corrected estimation parallel to conventional DEA efficiency. The efficiency scores obtained from this technique show which countries are considered to be innovation leaders because their innovation performance is efficient under both constant and variable returns to scale in the process of transforming innovation inputs into innovation outputs. We suggest some key policy implications that can be learned from these innovation leaders. Subsequently, we apply the Tobit mo...

52 citations


Journal ArticleDOI
Jochen Hartwig1
TL;DR: The authors showed that demand growth is reduced by a redistribution towards profits in the average OECD country, and that productivity growth is also impaired by such a redistribution, in a very limited number of countries.
Abstract: The Bhaduri–Marglin model is a post-Kaleckian model that allows one to study the impact of a functional income distribution on the growth in demand. Over recent years, a number of empirical studies based on this model have aimed at determining whether a redistribution towards profits harms or fosters demand growth. The focus so far has been on a very limited number of countries. This paper is the first to test the Bhaduri–Marglin model with panel data. It finds that demand growth is reduced by a redistribution towards profits in the average OECD country. Productivity growth is also impaired.

44 citations


Journal ArticleDOI
TL;DR: In this paper, the authors focus on the evolution of the major macroeconomic variables of classical political economy and contrast with their orthodox counterparts in the quest to identify the causes of the current crisis in the Greek economy.
Abstract: The focus of this paper is on the evolution of the major macroeconomic variables of classical political economy and the contrast with their orthodox counterparts in the quest to identify the causes of the current crisis in the Greek economy. Our analysis shows that declining profitability past a certain point leads to a stagnant mass of real net profits that discourage investment and increase unemployment. More specifically, for the period 1970–2007 for which we have detailed data, we identify the so-called silent depression of the 1970s and early 1980s, the new golden age of accumulation during which the capitalization of the production process led to a rapidly growing productivity and with stagnant or slowly rising real wages increased the rate of surplus value to new heights. As a consequence, the rate of profit from the mid-1980s onwards displayed a mildly rising trend and remained at a much lower level than that of the early 1970s. The rate of profit starts to fall after 2007, the year of the onset o...

26 citations


Journal ArticleDOI
TL;DR: In this paper, the authors employ the vector error correction econometric technique in terms of empirical analysis, which permits them to model the long-run equilibrium relationship and the short-run dynamics, which also helps to account for endogeneity and reverse causality problems.
Abstract: Recent episodes of housing bubbles, which occurred in several economies after the burst of the United States housing market, suggest studying the evolution of housing prices from a global perspective. We utilise a theoretical model for the purposes of this contribution, which identifies the main drivers of housing price appreciation, such as, for example, income, residential investment, financial elements, fiscal policy and demographics. In a second stage of our analysis, we test our theoretical hypothesis by means of a sample of 18 OECD countries from 1970 to 2011. We employ the vector error correction econometric technique in terms of our empirical analysis, which permits us to model the long-run equilibrium relationship and the short-run dynamics, which also helps to account for endogeneity and reverse causality problems.

24 citations


Journal ArticleDOI
TL;DR: In this paper, the authors provide statistical evidence around jumps affecting commodity returns using nearly 20 years of daily data, using Laurent, Lecourt, and Palm's (2011) methodology to jump extraction, and discuss various aspects of the estimated jump activity.
Abstract: In this article, we provide statistical evidence around jumps affecting commodity returns. Using nearly 20 years of daily data, we use Laurent, Lecourt, and Palm's (2011) methodology to jump extraction, and discuss various aspects of the estimated jump activity. On average across various commodity markets, we find a high number of days for which returns exhibit the presence of jumps, consistently with the intuition that commodities are affected by large price fluctuations. We emphasize that the post-jump average return depends on the commodity sector considered (e.g. agriculture, energy, or metals). We also show evidence of a jump-to-volatility channel for commodities (similar to the effect usually found for equities). Finally, we diagnose around 40 dates during which commodity indices, stocks, bonds and currencies `co-jump’, revealing a tail dependence between standard and alternative assets.

24 citations


Journal ArticleDOI
TL;DR: In this article, the authors developed Minskyan financial fragility indices for the government sector and examined the financial structure of the Greek government before and after the onset of the sovereign debt crisis in 2009.
Abstract: The purpose of this paper is to develop Minskyan financial fragility indices for the government sector and to examine the financial structure of the Greek government before and after the onset of the sovereign debt crisis in 2009. We provide empirical evidence that clearly shows the growing financial fragility of the Greek public sector in the 2000s. We also assess the effectiveness of the implemented bailout adjustment programmes in Greece and claim that the conducted austerity measures and fiscal consolidation have not significantly improved the financial posture of the Greek government sector. We argue that the implementation of fiscal and wage austerity in an economy that lacks structural competitiveness produces prolonged recession and unemployment with adverse feedback effects on the financial fragility of the government.

23 citations


Journal ArticleDOI
TL;DR: In this article, the authors examined the relationship between labour productivity, real wages and inflation in Malaysia using the bounds testing approach to cointegration and also the Granger causality test.
Abstract: This study examines the relationship between labour productivity, real wages and inflation in Malaysia using the bounds testing approach to cointegration and also the Granger causality test. The findings of this study suggest that inflation is negatively related to labour productivity. However, the effect of real wages on labour productivity is non-linear and the two have an inverted-U shape relationship. From a policy viewpoint, the Granger causality test shows that real wages Granger-cause labour productivity, but there is no evidence of reversal causation. Hence, the Malaysian dataset supports the claims by the efficiency wage theory. Moreover, we find that inflation and labour productivity in Malaysia have bilateral causality in the short- and the long-run.

22 citations


Journal ArticleDOI
TL;DR: In this paper, the authors revisited the theoretical motives of corporate cash holdings while concentrating on the effect of political connections, and found that connected firms hold significantly larger cash reserves than their non-connected counterparts, thus confirming the complementary hypothesis, which suggests that agency problems lead connected firms to accumulate large amount of cash.
Abstract: In this paper, we revisit the theoretical motives of corporate cash holdings while concentrating on the effect of political connections. In particular, we postulate two competing hypotheses for the effects that political connections can have on cash holdings: ‘substitution effect hypothesis’ and ‘complementary effect hypothesis’. Using the data on Pakistani firms over the period 2002–2010, we find that connected firms hold significantly larger cash reserves than their non-connected counterparts, thus confirming the ‘complementary hypothesis’, which suggests that agency problems lead connected firms to accumulate large amount of cash. Further, this effect is found to be more pronounced in dictatorial as opposed to democratic regimes indicating the presence of higher degrees of political patronage in that period. Finally, we also find differences in the complementary effect based on firm characteristics. Our results suggest that the firm size and leverage have increasing effects on the cash holdings of conn...

17 citations


Journal ArticleDOI
TL;DR: In this article, the effects of domestic and foreign demand impulses in euro area economies following the Great Recession of 2008-2009 and the Eurozone crisis of 2011-2012 were studied.
Abstract: This paper studies the effects of domestic and foreign demand impulses in euro area economies following the Great Recession of 2008–2009 and the Eurozone crisis of 2011–2012. Using a global Input–Output framework we apply a set of metrics to assess spillover effects of international trade in intermediates triggered by the dynamics of final demand. Our findings suggest that while cross-country trade spillovers have played a crucial role during the Great Recession, they have had a moderate impact when compared with the role of domestic sources of final demand during the Eurozone crisis. Hence, a strategy of coordinated fiscal austerity cannot be sustained by empirical evidence.

Journal ArticleDOI
TL;DR: In this article, an analysis of the sources of international competitiveness with Greek export data for the period 1987-2007 is presented, which incorporates factors that do not only represent cost competitiveness but also shed light on the determinants of economic complexity, the amount of knowledge capabilities embodied in exports that indicates the ability for product differentiation and product variety.
Abstract: This is an analysis of the sources of international competitiveness with Greek export data for the period 1987–2007. The framework used in the study incorporates factors that do not only represent cost competitiveness but also shed light on the determinants of economic complexity. Economic complexity is the amount of knowledge capabilities embodied in exports that indicates – as a source of comparative advantage – the ability for product differentiation and product variety. The empirical analysis shows that industries benefit substantially from their own R&D activity but, owing to weak economic complexity in the country, there are no cross-industry knowledge spillovers (both at national and international level) that can benefit export activity. Greek exports were found to be sensitive to relative unit labour costs (RULC) but the most important export component of this index is relative labour productivity and not labour cost. Not all institutional arrangements have the same impact on exports, for example high trade union density might harm competitiveness but this factor is uncorrelated with R&D investment. In the view of these findings, Greece’s route to international competitiveness should be primarily by improving its economic complexity, making sure that the country specialises in productive activities that enrich its knowledge capabilities as well as increase the potential of knowledge transfer.

Journal ArticleDOI
TL;DR: In this paper, the role of foreign direct investment (FDI) in boosting the productivity of developing and emerging countries was investigated, and it was shown that FDI boosts the overall productivity level of the developing countries' exports.
Abstract: Raising the productivity content of exports is an important issue for developing and emerging countries. What role do foreign firms play in this process? This question has not been adequately studied. We contribute to the literature by generalizing the role of foreign direct investment (FDI) in the host country’s export productivity level. Using panel data, we present new empirical evidence suggesting that FDI boosts the overall productivity level of the developing and emerging countries’ exports.

Journal ArticleDOI
TL;DR: In this paper, the authors address the question of earnings dispersion by applying a "nested" decomposition procedure of the Theil inequality measure, which combines into a unified framework the standard decompositions by population subgroups and income sources.
Abstract: Using four waves of data from the Participation Labour Unemployment Survey, a database of information on the Italian labour market supply, we address the question of earnings dispersion by applying a ‘nested’ decomposition procedure of the Theil inequality measure, which combines into a unified framework the standard decompositions by population subgroups and income sources. The empirical evidence obtained points to the key role played by the self-employees in shaping labour income inequality, especially at the upper extreme of the earnings distribution, and the emergence of non-standard forms of employment as an important feature of the contemporary workplace.

Journal ArticleDOI
TL;DR: In this article, the determinants of internationalization and the specific role played by the agglomeration of small and medium sized enterprises through their proximity to a large firm are investigated.
Abstract: In this paper we focus on the determinants of internationalization and, in particular, on the specific role played by the agglomeration of small and medium sized enterprises (SMEs) through their proximity to a large firm. We study the characteristics of the internationalization process in a representative sample of 786 firms in the Italian automotive supply chain. After building an Internationalization Strategy Index (ISI), we perform a multinomial logit econometric analysis. The main findings of the empirical analysis are: (a) Italian automotive supplier firms mainly go in the foreign markets through export, i.e. the simplest internationalization mode; (b) as predicted in the literature, individual firm characteristics play a significant role in the probability of internationalization; (c) firms located in the province of Turin, where the dominant car assembler (Fiat) in Italy has its headquarters, or more generally, in large automotive industry districts, enjoy a clear localization advantage; (d) intere...

Journal ArticleDOI
TL;DR: In this article, the authors examined whether corporate governance mechanisms and compliance with good governance practice are related to cash dividends and found that institutional owners positively affect cash dividend payments, suggesting that UK institutions are effective in forcing firms to disgorge cash.
Abstract: The study examines whether corporate governance mechanisms and the compliance with good governance practice are related to cash dividends. In particular, the study assesses the effect of institutional ownership and board structure on the decision to pay cash dividends. A study on UK firms is interesting because firms are expected to voluntarily structure governance mechanisms based on their own needs. We find that institutional owners positively affect cash dividend payments, suggesting that UK institutions are effective in forcing firms to disgorge cash. There is limited evidence that independent directors affect the cash dividends. The results also show that firm specifics affect the cash dividends, namely, business risk, firm size, and leverage ratio. The results are consistent across several robustness checks.

Journal ArticleDOI
TL;DR: In this paper, the authors argue that wages lagging behind productivity is a long-run structural phenomenon due to the interplay of wage dynamics and productivity growth, a term that can only be nullified in the utopian case of zero growth and/or no dynamics.
Abstract: This paper argues that wages lagging behind productivity is a long-run structural phenomenon due to the interplay of wage dynamics and productivity growth. We call this interplay frictional growth, a term that can only be nullified in the utopian case of zero growth and/or no dynamics. In that vein, we challenge the prevailing view of the neutrality of the labour income share and investigate its impact on the evolution of employment. We thus estimate wage setting and labour demand equation systems – for France, Germany, Italy, Japan, Spain, the UK, and the US over the 1960–2008 period – and find that the labour share is negatively associated with employment even when the conventional assumption of a unitary long-run elasticity of wages with respect to productivity holds. Acknowledging the presence of the wage-productivity gap in both the short and long run, this work stands as the building block for assessing the effect of the falling labour share on economic activity. As recent work has shown that the wi...

Journal ArticleDOI
TL;DR: In this article, the authors examined the relationship between university graduates' early career earnings and three measures of university quality: the number of teachers per student, the publication per researcher, and the applicants per admitted student.
Abstract: Using administrative data from Finland, this paper empirically examines the relationship between university graduates’ early career earnings and three measures of university quality: the number of teachers per student, the number of publications per researcher and the number of applicants per admitted student. A distinction to previous studies is made by paying special attention to field-of-study heterogeneity: the quality measures are allowed to vary by a student’s field, while the heterogeneity of earnings and individuals across fields is accounted for in the analysis. For the most part, the results indicate that the relationship between institution quality and earnings is rather weak; however, certain significant quality effects are also found. In particular, the teachers/student ratio is found to be positively associated with the earnings of women and graduates from the humanities. Overall, the results indicate considerable heterogeneity in quality effects across genders and fields.

Journal ArticleDOI
TL;DR: In this article, the authors investigate the efficacy of preferential trade liberalization in changing the observed trade pattern among the South Asian countries that have entered into the SAFTA (South Asian Free Trade Agreement) and find no empirical evidence of trade creation among SAFTA members.
Abstract: We investigate the efficacy of preferential trade liberalization in changing the observed trade pattern among the South Asian countries that have entered into the South Asian Free Trade Agreement (SAFTA). Although in its nascent stage, some data are now available to provide an ex-post evaluation of the performance of this bloc. Using these data, we find no empirical evidence of trade creation among SAFTA members, which is not surprising given that tariff concessions in SAFTA are small and are offset by complicated rules of origin procedure. However, a substantial and statistically significant increase in exports from SAFTA members to the rest of the world is found. Several panel strategies are used to check the sensitivity of the results against the assumptions of the estimation strategies. As some key coefficient estimates are found to differ across estimation methods, policymakers in South Asia need to use care in relying on the results from empirical studies, including our own, in formulating their tra...

Journal ArticleDOI
TL;DR: In this paper, the authors explore the impact of a wide set of determinants along with the technological infrastructures on goods and services exports in gravity models using panel data for 48 heterogeneous countries for the period 2000-2010.
Abstract: Using panel data for 48 heterogeneous countries for the period 2000–2010, we explore the impact of a wide set of determinants along with the technological infrastructures on goods and services exports in gravity models. We find that along with the usual basic factors such as incomes, distance, exchange rate depreciation, exchange rate regimes, common language, contiguity, free trade areas, colonial links, the technological infrastructures and complementarity between services and goods exports are quite crucial determinants for both types of exports. Among the technological infrastructures, internet use plays a significant role in promoting service exports rather than promoting goods exports.

Journal ArticleDOI
Mark Gius1
TL;DR: In this article, the authors examined three types of job changes to determine which ones result in higher incomes: a change in occupational status, change in industry, or change in both.
Abstract: According to the Bureau of Labor Statistics, the median number of years that a US worker has been with their current employer is 4.4 years. Although many job changes may not be classified as ‘career changes,’ any type of job change may have an impact on a person’s future earnings. In the present study, the following three types of job changes are examined in order to determine which ones result in higher incomes: a change in occupational status; a change in industry; or a change in both. Using data from the National Longitudinal Survey of Youth (NLSY), a log-linear wage regression with a correction for self-selection is estimated. Results suggest that changing jobs within the same industry or within the same occupation both increase a person’s income. However, a job change that is characterized by both a change in industry and occupation reduces a person’s income. The present study is one of the few studies to examine the effects of job mobility on earnings when mobility is defined in the context of chang...

Journal ArticleDOI
TL;DR: In this article, the impact of currency depreciation on bilateral trade between Malaysia and China, especially how a real depreciation of ringgit against the yuan on each industry's inpayments and outpayments affect the trade balance was investigated.
Abstract: This paper investigates the impact of currency depreciation on bilateral trade between Malaysia and China, especially how a real depreciation of ringgit against the yuan on each industry’s inpayments and outpayments affect the trade balance. We employ disaggregated quarterly data on import and export for 52 industries over the period 1993Q1 to 2012Q4. The results from the bounds testing approach to the cointegration and error-correction model reveal that the real bilateral exchange rate has short and long-run effects on the inpayments and outpayments of the industries. However, the short-run effects shift into the long run in 14 out of 35 industries in the inpayment models and 17 out of 44 industries in the outpayments models. Most of these are small industries producing intermediate goods. According to the ML condition, the depreciation of ringgit against yuan improves Malaysia’s trade balance with China in these industries.

Journal ArticleDOI
TL;DR: The authors found that observers who provided subjective coding of property rights scores rated nations more positively when their economic performance was positive, and more negatively during the recent global financial crisis, concluding that exposure to recent information on economic performance introduces bias to coding of Property Rights scores.
Abstract: Recent years have seen an increasing number of empirical papers using subjective indicators in cross-country quantitative analyses of growth. We evaluate potential observer biases in the three most commonly employed subjective measures of property rights – taken from the Heritage Foundation, Fraser Institute, and World Economic Forum. Drawing on cross-national data for 156 countries during the years 2000 – 2010, we use Granger causality tests to assess whether exposure to recent information on economic performance introduces bias to coding of property rights scores. Further, we evaluate whether the Great Recession led observers to change property rights scores in advanced nations. We find consistent evidence that observers who provide subjective coding of property rights scores rated nations more positively when their economic performance was positive, and more negatively during the recent global financial crisis. Taken together, our findings suggest that coding of commonly employed property rights measur...

Journal ArticleDOI
TL;DR: The Italian gender wage gap is related to a gap in returns to education which causes a sizable glass ceiling effect as discussed by the authors, and the gap is detected by quantile regressions implemented in different subsets.
Abstract: The Italian gender wage gap is related to a gap in returns to education which causes a sizable glass ceiling effect. The gap is detected by quantile regressions implemented in different subsets. Quantile regressions allow computation of both the average gap and the divergence in the tails of the wage distribution. Comparison of the equations estimated separately for men and women, reveals a divergence in wage determinants for the average and for all quantiles. The statistical relevance of this divergence is verified by a test of changing coefficients. By repeatedly implementing this test to compare subsets of different regions, cohorts, and education levels, it is possible to rank the factors affecting the gap and to pinpoint at which quantile their impact is greater. Gender turns out to be a relevant source of changes to the coefficients, particularly for the top quantiles, and the regional variable interacts with the returns to education gap, determining a sizeable glass ceiling on southern women’s careers.

Journal ArticleDOI
TL;DR: In this article, the authors consider various transmission channels that work through trade in goods and services, and find econometric evidence suggesting that shrinking global imbalances may create problems for Latin America.
Abstract: Is the ongoing economic slowdown in industrialized countries likely to impact Latin American growth negatively in the medium- to long-run? This paper considers various transmission channels that work through trade in goods and services, and finds econometric evidence suggesting that shrinking global imbalances may create problems for Latin America. Specifically, using panel data analysis, we find that the trade balance as a proportion of GDP is positively associated with Latin American economic growth over the period 1953–2009. We then develop a simple dynamic model to help explain our main finding through investment and saving behaviour.

Journal ArticleDOI
TL;DR: In this paper, the authors examined the impact of human capital on technical inefficiency of one-digit industries of the Greek economy, for the period 2000-2005, and found that the highest contribution of human resources on technical efficiency was observed in the industries of Health, Education, Financial intermediation and Real estate, renting & business activities.
Abstract: In this paper we examine the impact of human capital on technical inefficiency. A stochastic production frontier is simultaneously estimated with a technical inefficiency model using data from one-digit industries of the Greek economy, for the period 2000–2005. The results indicate a significantly negative impact of human capital on technical inefficiency, which is comparatively lower in magnitude for the sector of public services. The most efficient industries of the Greek economy are those of Education, Financial intermediation and Real estate, renting & business activities. The highest contribution of human capital on technical efficiency is observed in the industries of Health, Education and Real estate, renting & business activities.

Journal ArticleDOI
TL;DR: This paper examined the dynamic and switching effects of volatility spillovers arising from US stock market returns and GDP growth on those of Australia, Canada and the UK using a constant probability Markov regime switching model.
Abstract: This paper examines the dynamic and switching effects of volatility spillovers arising from US stock market returns and GDP growth on those of Australia, Canada and the UK. For this purpose, we use quarterly data (1961q1–2013q1) and a constant probability Markov regime switching model. We found that the US stock market volatility significantly affects the stock market volatility of all three countries at least in one of the two specified regimes over time. However, the stock market volatilities in none of the three countries are contemporaneously influenced by the US output volatility even after allowing for two distinct regimes. On the other hand, the US stock market volatility exerts significant influences on the output volatilities of both Australia and the UK. Compared with Australia and the UK, Canada and the US show substantial output volatility co-movements, thereby confirming the close association between the two neighbouring economies through the NAFTA (North American Free Trade Agreement). We co...

Journal ArticleDOI
TL;DR: In this paper, the authors investigated the competitive conditions in the examined industries at a disaggregated level (two and three digit ISIC codes) and found that the Greek manufacturing and services industries operate in noncompetitive conditions.
Abstract: This paper investigates the level of market power in the Greek manufacturing and services industry over the period 1970–2007. Based on the Roeger methodology, we investigate the competitive conditions in the examined industries at a disaggregated level (two and three digit ISIC codes). The empirical results indicate that the Greek manufacturing and services industries operate in non-competitive conditions. Moreover, average mark-up ratios are heterogeneous across sectors, with manufacturing having higher mark ups on average than services. In contrast to other related studies, we provide sufficient evidence about the movements of mark-up ratios over time. According to our findings, the mark-up ratios in the manufacturing sectors are, on average, higher in the post European Union (EU) accession period (1982–1992), as a result of the merger wave in the manufacturing industry. However, this upward trend stopped within the period (1993–2007), and the relevant ratios have decreased substantially. The econometri...

Journal ArticleDOI
TL;DR: In this article, the authors analyse trends in country terms-of-trade for goods and services rather than those for commodities and find that low-income countries have no unit roots, over-differencing is inefficient and biases significance levels in first differences against the fall in the terms of trade.
Abstract: . The debate about the Prebisch-Singer thesis has focused on primary commodities with some extensions to manufactures. As we think that the link between the terms of trade and long-run development, growth and convergence is the ability of exports to enhance investment through importing capital goods we analyse trends in country terms-of-trade for goods and services rather than those for commodities. Open economy growth models may be observationally equivalent to closed economy growth models under special conditions where they generate constant though endogenous terms of trade. We therefore consider trends in terms of trade for country groups according to the World Bank income classification. We find that all groups but the poorest have common unit roots, but none has individual unit roots. As low-income countries have no unit roots, over-differencing is inefficient and biases significance levels in first differences against the fall in the terms of trade. For the low-income countries the terms of trade of goods and services are falling at a rate that is significantly negative without and with endogeneity treatment by system GMM. A comprehensive analysis of the effects of time dummies supports the result of falling terms of trade for low-income countries. When all coefficients are country-specific 50% of all low-income countries have falling terms of trade in a simultaneous equation estimation using the SUR method.

Journal ArticleDOI
TL;DR: In this article, the authors investigate if participation in the Indian Self Help Group (SHG) program results in reducing poverty and vulnerability and show that SHG members are less vulnerable compared with a group of non-SHG (control) members.
Abstract: We investigate if participation in the Indian Self Help Group (SHG) program results in reducing poverty and vulnerability. The theoretical framework examines the mechanisms through which the pecuniary and non-pecuniary effects of the SHG impacts the households’ ability to manage risk. We use a vulnerability measure that quantifies the welfare loss associated with poverty and different types of risks, on an Indian panel survey data. Our results show that SHG members are less vulnerable compared with a group of non-SHG (control) members. About 80% of the vulnerability faced by the households is poverty related.