Macroeconomic impact of public debt and foreign aid in Sri Lanka

Accumulation of public debt in Sri Lanka is raised significantly since the independence. It exceeded 100% of gross domestic products (GDP) in the late 1980s and the early 2000s. Although it has been declined in the recent past and becomes 79.3% of GDP in 2016; the high level of debt in a weak fiscal position of the small economy Sri Lanka is an issue of concern. In this backdrop, this paper examines the impact of public debt and foreign aid on income, price level and interest rate in Sri Lanka for the post-reform period. It is found that public debt in general and foreign debt, in particular, depresses income and stimulates price level. Domestic debt has some impact on the price level. On the other hand, foreign aid has a deleterious effect on both the income and price level. The foreign debt and aid have raised interest rate both in the short-run and in the long-run, while no significant impact of the domestic debt on interest rate is found. Based on these findings, the paper elaborates on some long-term measures for reducing the dependence on debt and aid in Sri Lanka.     

Family leave policy and child mortality: Evidence from 19 OECD countries from 1969 to 2010

This study examined the effects of family leave policy on five age‐specific child mortality rates across 19 Organization for Economic Co‐operation and Development countries from 1969 to 2010. I used the dataset developed by Ruhm and Tanaka and extended it with data from various institutions, including the Max Planck Institute for Demographic Research. I controlled for six relevant variables including GDP per capita and health expenditures, three child health indicators, as well as three social expenditure measures for families. I included in all models country and year fixed effects as well as country‐time trend interactions. Throughout all model specifications, the results indicated that job‐protected paid leave significantly reduces infant mortality (death at less than 1 year of age) and postneonatal mortality (death between 1 month and 1 year of age). Other leave (unpaid or nonjob protected) had no significant effects on any of the outcome indicators.     

Immigration,terrorism, and the economy

In this paper, we look at the interaction of terrorism with immigrants’ quality of life (measured by the foreign-born unemployment rate and globalization level) for OECD countries, and its impact on GDP per capita. We find strong evidence that GDP per capita is adversely affected by domestic terrorism. The magnitude of this effect is also substantial: at the sample mean, a one-standard-deviation increase in the number of domestic incidents is found to decrease GDP per capita between 5.7 % and 7.8 % of the sample average depending on the specification used. These results contrast with previous research which finds that transnational terrorism primarily affects these economic indicators. We find strong evidence that when we factor in the interaction of the foreign-born unemployment rate with either type of terrorism, an increase in the foreign-born unemployment rate decreases GDP per capita. On the policy front, we show that peace is valuable, and OECD countries will benefit by adopting policies to reduce the problem of terrorism. We also find that an increase in the foreign-born unemployment rate has a large negative impact on GDP per capita and policies that close the gap between foreign-born and native-born unemployment rates (for example, those aimed at reducing discrimination against immigrants) help the economy.     

The impact of fiscal shocks on real GDP and income inequality: What do Australian data say?

This paper examines the impact of three fiscal policy shocks on per capita real GDP and income inequality in Australia during the period 1965–2014. A small structural vector autoregressive (SVAR) model is constructed for an open economy for contemporaneous identification and estimation purposes. Based on the evidence of one cointegrating vector among the variables, a structural vector error correction (SVEC) model is specified for the long run. Direct taxation, indirect taxation receipts and government spending are identified as permanent fiscal policy shocks. The convergent use of two different models (SVAR & SVEC) strengthens the credibility of the results. The results have three key policy implications. First, a reduction in direct taxation receipts increases per capita real GDP without increasing income inequality. Second, a reduction in government expenditure significantly increases income inequality. Third, the adverse effect of indirect taxation receipts on income inequality is greater than the redistributive effect of government expenditure, which questions the widely held fiscal policy strategy of using indirect taxation to finance redistributive expenditure.     

Testing the affluence hypothesis: A cross-cultural analysis of the determinants of environmental action

This paper tests empirically the “affluence hypothesis” that states that the level of national income per capita influences the level of environmental concern expressed by the population. The hypothesis is tested in cross-sectional analyses of five aggregate variables measuring involvement in environmental protection. These variables are derived from answers to the World Values Survey (third wave). The interdisciplinary literature on the emergence of environmental awareness suggests that, in addition to national income, levels of education, subjective well-being, population density and income inequality may positively impact national preferences regarding environmental protection. The analysis conducted in this paper shows some statistical evidence of a U-shaped relationship between GDP per capita and some measures of environmental action. Furthermore, it is found that income inequality, education, population density and subjective well-being play a role in explaining cross-cultural differences in preferences over specific environmental actions. Overall the evidence included in this paper lends qualified support to the “affluence hypothesis.” However, it also indicates that involvement in environmental protection may be stronger in poorer countries than is commonly thought.     

The relationship among CO2 emissions,electricity power consumption and GDP in OECD countries

This paper proposes a panel vector error correction model investigation of a quadratic relationship linking CO₂ emissions, GDP levels and electric power consumption. We find that two independent long-run relationships emerge from the data. Since the null of homogeneity across units with regard to long-run elasticities is strongly rejected, we proceed by clustering countries according to the signs of the estimated coefficients. The approach allows us to form three groups: in the first there is evidence of an optimistic scenario, where both CO₂ emissions and electric power consumption are bound to decrease in the long-run. An optimistic scenario for emissions reduction is also provided in the second cluster where, however, the long-run relationship between income and electric power consumption shows an U-shaped pattern, instead. Finally, the third cluster can be associated with a much worrying scenario where per capita CO₂ is expected to grow with income. A joint consideration of long-run parameters and causality links allows us to propose cluster-tailored policy suggestions.     

Corruption, anti-corruption, and inter-county income disparity in China

The rapid economic growth in China has been connected with a large income gap across regions. While most existing research has focused on economic factors to explain the problem, we argue that local government's anti-corruption endeavors also play a very significant role in influencing local income levels. Recent research shows that corruption undermines economic growth and generates poverty, we therefore hypothesize that government anti-corruption measures should increase local income levels. Using county-level data and Ordinary Least Square (OLS) estimates, we find counties with higher degree of anti-corruption tend to have higher income measured by county-level per capita GDP. We also employ a recently developed Shapley value decomposition technique to quantify the contributions of each variable. We find that anti-corruption plays a large role in explaining inter-county income disparity in China.     

Why do richer democracies survive?—The non-effect of unconventional political participation

Since Seymour Lipset's (1959) seminal article on the social prerequisites of democracy, many scholars have found a strong empirical correlation between increases in per capita income and democracy. Given this strong connection however, an important gap in the literature remains—what are the pathways linking wealth and democracy? This paper attempts to establish the validity of one of the possible paths by testing the three-fold relationship between per capita Gross Domestic Product (GDP), unconventional political participation and democratic consolidation. Despite finding a strong positive correlation between per capita GDP and the consolidation of democracy, this research reveals that unconventional political participation is not mediating this effect.     

The Clean Air Act of 1970 and Adult Mortality

Previous research has established an association between air pollution and adult mortality. However, studies utilizing short-term fluctuations in pollution may detect mortality changes among the already ill or dying, while prospective cohort studies, which utilize geographic differences in long-run pollution levels, may suffer from severe omitted variables bias. This study utilizes the long-run reduction in total suspended particulates (TSPs) pollution induced by the Clean Air Act of 1970, which mandated aggressive regulation of local polluters in heavily polluted counties. We find that regulatory status is associated with large reductions in TSPs pollution but has little association with reductions in either adult or elderly mortality. These findings are interpreted with caution due to several caveats.     

Does inflation targeting matter for output growth? Evidence from industrial and emerging economies

This paper examines the effects of inflation targeting (IT) on output growth over the “globalization years” of 1986-2004. Employing static panel data methods that control for traditional growth determinants, trade openness and financial globalization, the paper finds that the adoption of a fully fledged IT regime results in higher output income per capita for industrial and emerging economies. However, under dynamic model specifications, the estimated long-run output impact of inflation targeting for emerging market economies is found to be lower than in the case of static models. We argue that this might be due to the long lags until the full effects of greater credibility are felt in the real economy and the fact that emerging market economies adopted the regime much later than industrial economies.     

The impacts of housing factors on deprivation in a world city: The case of Hong Kong

Hong Kong is a typical example of a world city that faces escalating poverty and housing problems. Problems related to housing are crucial in determining deprivation. By means of hierarchical linear regression on a representative survey of Hong Kong residents in 2014, this study examines the impacts of household income and housing factors on the deprivation of residents in Hong Kong. The study indicates that income level has a crucial effect on the deprivation level of households; whereas housing cost per capita, living area per capita, and living quarter problems significantly influence deprivation. A small interacting effect exists between household income and housing factors, which do not influence the independent effects of living area per capita and living quarter problems on deprivation. For the public rental housing residents, only the effect of living quarter problem on deprivation is significant, whereas for private rental housing residents, living area per capita and living quarter problem have a significant effect. Among all the models, housing expense per capita is a significant factor only in model for overcrowded households. The study recommends that improving the maintenance and renovation schemes for public and private housing with poor living environment is a good strategy to improve housing conditions and deprivation. The study suggests that anti‐poverty policies must consider strategies and measures that can improve the housing factors, including housing expenses, living density and living quarter maintenance problems, especially for those residents with high living density, such as those living in bed spaces, cubicles, and subdivided flats.     

Does the Internet increase labor productivity? Evidence from a cross-country dynamic panel

The Internet has various economic functions and is a fundamental part of most economic activities and transactions. In this paper we apply a Dynamic Panel Data approach to study the impact of the Internet on labor productivity using data from 108 countries for the period 1995–2010. The results of the study show that the Internet has positive and statistically significant effects on labor productivity. Assuming other factors stay constant, increasing the number of Internet users by one percent increases GDP per employed person by $8.16–14.6. Educational expenditures as a percentage of GNI, per capita health expenditures, trade and gross capital formation as a percentage of GDP also have positive and statistically significant effects on labor productivity.     

A note on the determinants of sexually transmitted disease rates

This paper addresses the impact of several factors on rates of sexually transmitted disease (STD) in the United States. Similar to existing studies, which proxy health outcomes by mortality rates or life expectancy, we find that health care spending improves health outcome. That is, using annual data over the 1960–1997 period, rates of syphilis, gonorrhea, and chancroid fall with increases in per capita health care expenditure. Furthermore, per capita income, per pupil education expenditure, as well as a host of socio-demographic variables, also affect STD rates.     

更富裕是否意味着更幸福?基于横截面时间序列数据的分析(2003-2013)

四十年前,经济学家伊斯特林提出了“幸福感悖论”:短时期内个人和国家的财富水平与幸福感都正向相关,而在长期背景下,经济增长并不会显著提高整体幸福感水平。本文使用横跨十年的全国代表性横截面时间序列数据直接检验了财富与幸福感的关系,结果证实了“幸福感悖论”。研究发现,虽然在短时期内,无论是家庭人均收入还是省份的人均生产总值都与幸福感有显著的正相关,但在经济高速发展的十年内(2003-2013),省份人均生产总值的变化与幸福感的变化之间并没有显著相关。     

中国的刘易斯转折点是否到来——理论辨析与国际经验

各国农业劳动力占总劳动力的比重随着各国人均GDP增长呈现先加速下降而后减速下降的趋势,分界点就是刘易斯转折点。跨国平行数据的回归结果表明,刘易斯转折点在人均GDP为3,000—4,000美元（购买力平价2000年国际美元）之间出现。中国的人均GDP超越了这一水平,但农业劳动力比重远高于该经济发展水平下的世界平均水平,这很可能意味着中国的农业劳动力转移仍有较大潜力。     

Does biomass energy consumption reduce total energy CO2 emissions in the US?

This study investigates the causal relationship between total biomass energy consumption, total energy CO₂ emissions, and GDP in the United States for the period January 1973–December 2016 by employing a directed acyclic graph (DAG) techniques and the Autoregressive Distributed Lag (ARDL) model. Additionally, this paper examines the existence of the environmental Kuznets curve (EKC) hypothesis. The result of the DAG reveals that total biomass energy consumption and GDP have a unidirectional contemporaneous causal relationship with total energy CO₂ emissions. Based on the results of the ARDL, we find that a 1% increase in per capita total biomass energy consumption causes a 0.65% reduction in per capita total energy CO₂ emissions in the long-run. This finding implies that expanding the usage of biomass is one way to reduce and control greenhouse gases in the US. Moreover, we find that the inverted U-shaped EKC hypothesis is satisfied for the US case. Findings from this study suggest that energy policies should stimulate an increase of biomass production for reducing total energy CO₂.     

Has the Lewis Turning Point Arrived in China?—Theoretical Analysis and International Experience

各国农业劳动力占总劳动力的比重随着各国人均GDP增长呈现先加速下降而后减 速下降的趋势, 分界点就是刘易斯转折点。跨国平行数据的回归结果表明, 刘易斯转 折点在人均GDP为3,000-4,000美元 (购买力平价2000年国际美元) 之间出现。中国的 人均GDP超越了这一水平, 但农业劳动力比重远高于该经济发展水平下的世界平均水 平, 这很可能意味着中国的农业劳动力转移仍有较大潜力。

关键词: 刘易斯转折点 劳动力转移 跨国平行数据

Using World Bank cross-country panel data to estimate the economic development level that corresponds to the Lewis turning point, we find that as GDP per capita increases, the share of rural labor in the total labor force tends to decrease first at an accelerated rate and then, after passing the Lewis turning point, at a reduced rate. Regression analysis of cross- country panel data shows that the Lewis turning point is reached when GDP per capita reaches somewhere between US$3,000 and US$4,000 dollars (PPP, constant international US dollars for the year 2000). GDP per capita in China has exceeded this level, but the proportion of rural labor in the total labor force remains much higher than the average for countries at the same level of economic development. This may imply that there is still considerable potential for rural labor transfer in China.     

Output gap and non-linear economic convergence

We apply unit root tests in a multivariate TAR model with bootstrapping simulations to assess the influence of short-run economic conditions on long-run economic convergence and to extract economic policy implications. We use two different groups of countries whose members share important business cycle characteristics over the period 1953–2010. We show that per capita income convergence is not uniform along the business cycle and our analysis reveals that, apart from growth-led actions and structural reforms to avoid the evolution towards different national stationary states – especially within the euro zone – short-run stabilisation policies are vividly advised to guarantee long-run economic convergence.     

Higher Education Policy,Enrollment, and Income Inequality*

Objective. The objective of this article is to examine whether public expenditure on higher education has an effect on income inequality by increasing enrollment. Methods. Combining data from the World Bank Development Indicators with data from the World Income Inequality Database version 2, we study the relation between government education expenditure and enrollment rates, as well as the relation between government education expenditure and the change in income inequality during the 1980s and the 1990s. Results. We find that public expenditure on higher education has no positive effect on enrollment. Increased enrollment is mainly explained by higher GDP per capita. Using carefully selected Gini coefficients to ensure comparability over time, we do not find a robust relation between higher education expenditure and lower income inequality, contrary to some previous studies. Conclusions. Government expenditure on higher education has very limited effects on enrollment and inequality. This finding, however, does not imply that there are no social benefits from such subsidies. For example, in countries where high marginal tax rates decrease the economic returns to education, governments may wish to compensate for this through subsidies.     

A Tale of Two Seasons: Participation and Medal Counts at the Summer and Winter Olympic Games*

Objectives. This article examines all postwar Summer and Winter Olympic Games in order to investigate the economic and political determinants of participation and medal‐winning success. Methods. Using newly compiled data, regression analysis gives intuitive results with surprisingly accurate predictions beyond the historical sample. We also estimate the rise in income per capita required to send an extra participant, and the “cost” in GDP per capita of an extra medal. Results. Compared to the Summer Games, Winter participation levels are driven more by income and less by population, have less host nation bias, and a greater effect of climate. Single‐party and communist regimes win more medals in both seasons. Conclusion. Although their effects differ with the season of the Games, socioeconomic variables explain Olympic participation and success remarkably well.