Economies

25 pages, 2939 KiB

Open AccessArticle

A Tale of Two Economies: Diachronic Comparative Analysis of Diverging Paths of Growth and Inequality in the United States and the United Kingdom

by Panagiotis Karountzos, Nikolaos T. Giannakopoulos, Damianos P. Sakas and Stavros P. Migkos

Economies 2024, 12(10), 274; https://doi.org/10.3390/economies12100274 - 8 Oct 2024

Abstract

This study investigates the correlation between the Gini index and gross domestic product (GDP) in two of the world’s largest capitalist economies: the United States and the United Kingdom. Utilizing econometric methods, including stationarity tests and linear regression, this research work aims to [...] Read more.

This study investigates the correlation between the Gini index and gross domestic product (GDP) in two of the world’s largest capitalist economies: the United States and the United Kingdom. Utilizing econometric methods, including stationarity tests and linear regression, this research work aims to elucidate the relationship between economic inequality and economic growth. The results for the United States reveal a significant positive correlation between GDP and the Gini index, suggesting that economic growth is associated with rising income inequality. In contrast, the United Kingdom shows a much weaker relationship, indicating that other factors, such as redistributive policies and social welfare programs, may mitigate the impact of economic growth on income inequality. These findings highlight the importance of national policies and institutional frameworks in shaping economic outcomes and can be used in policy making. This study contributes to the existing literature by providing a comparative analysis of the correlation between GDP and the Gini index in two major capitalist economies, offering fresh empirical insights. Full article

(This article belongs to the Special Issue Studies on Factors Affecting Economic Growth)

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20 pages, 2210 KiB

Open AccessArticle

The Digital Edge: Skills That Matter in the European Labour Market after COVID-19

by Viorel Țarcă, Florin-Alexandru Luca and Elena Țarcă

Economies 2024, 12(10), 273; https://doi.org/10.3390/economies12100273 - 8 Oct 2024

Abstract

Following the COVID-19 pandemic crisis, the emphasis on digitization and robotization has grown at an unprecedented rate in the global economy, resulting in significant changes to the labour market composition and increasing the value of digital skills. The aim of this article is [...] Read more.

Following the COVID-19 pandemic crisis, the emphasis on digitization and robotization has grown at an unprecedented rate in the global economy, resulting in significant changes to the labour market composition and increasing the value of digital skills. The aim of this article is to emphasize the ways in which people’s digital abilities and appetite for online activities are connected to job productivity (salary levels) and to determine which individual internet-based digital skills are genuinely important and correlated with better wages. We employed a Principal Component Analysis (PCA-type factorial analysis) with orthogonal rotation to gain a general understanding of the main components that synthesize the digital capabilities of individuals from the European countries analyzed. We decreased the dimensionality of our initial dataset to two major components, namely comprehensive online skills and digital social and media skills, keeping more than 80% of the overall variability. We then evaluated the potential association between the two created components and the average hourly wages and salaries. Since the end of the COVID-19 pandemic, we have observed an important shift in the impact of digital and internet skills on the job market in Europe. Thus, the development of comprehensive internet skills is highly correlated with individuals’ more effective integration into the labour market in Europe in general and the EU in particular, evidenced by better wage and salary levels (r = 0.740, p < 0.001). On the other hand, we found no correlation between the possibility of obtaining higher salaries for employees and the second component, digital social and media skills. The novelty of our research lies in its specific focus on the unique and immediate impacts of the pandemic, the accelerated adoption of digital skills, the integration of comprehensive individual internet skills, and the use of the most recent data to understand the labour market’s characteristics. This new approach offers fresh insights into how Europe’s workforce could evolve in response to unprecedented challenges, making it distinct from previous studies of labour market skills. Full article

(This article belongs to the Special Issue Economic Development, Labour Markets, and Education in the Digital Age)

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14 pages, 312 KiB

Open AccessArticle

Dynamics of Human Fertility, Environmental Pollution, and Socio-Economic Factors in Aral Sea Basin

by Olimjon Saidmamatov, Yuldoshboy Sobirov, Sardorbek Makhmudov, Peter Marty, Shahnoza Yusupova, Ergash Ibadullayev and Dilnavoz Toshnazarova

Economies 2024, 12(10), 272; https://doi.org/10.3390/economies12100272 - 7 Oct 2024

Abstract

One of the worst natural, economic, and social catastrophes caused by human activity is the Aral Sea crisis in Central Asia. The Aral Sea’s desiccation, which has an impact on the region’s overall sustainable development, human welfare, security, and survival, is what led [...] Read more.

One of the worst natural, economic, and social catastrophes caused by human activity is the Aral Sea crisis in Central Asia. The Aral Sea’s desiccation, which has an impact on the region’s overall sustainable development, human welfare, security, and survival, is what led to the problem. This study assesses the effects of economic expansion, population ageing, life expectancy, internet usage, and greenhouse gas emissions on the fertility rate in the countries that made up the Aral Sea basin between 1990 and 2021. Several econometric techniques were used in this study, including Pooled OLS (Ordinary Least Squares) with the Driscoll–Kraay estimating method, FMOLS (Fully Modified Ordinary Least Square), and DOLS (Dynamic Ordinary Least Square). Additionally, we used the Hurlin and Dumitrescu non-cause tests to verify the causal links between the variables. The empirical findings verify that a decrease in the fertility rate among women in the nations surrounding the Aral Sea occurs when the population of a certain age (women aged 15–64 as a percentage of the total population) grows and life expectancy rises. Greenhouse gas emissions (GHGs) also have an adverse effect on reproductive rates. Conversely, the region’s fertility rate may rise as a result of increased internet usage and economic growth. Furthermore, this study indicates that certain variables—aside from greenhouse gas emissions (GHGs)—have a causal relationship with the fertility rate. Full article

(This article belongs to the Special Issue Public Health Emergencies and Economic Development)

20 pages, 3055 KiB

Open AccessArticle

Evaluation of the Impact of the Internet of Things on Postal Service Efficiency in Slovakia

by Martin Baláž, Juraj Vaculík and Tatiana Corejova

Economies 2024, 12(10), 271; https://doi.org/10.3390/economies12100271 - 7 Oct 2024

Abstract

This paper investigates the impact of technological advancements, particularly the integration of the Internet of Things (IoT), on the efficiency and productivity of the postal service industry in Slovakia. By employing the Cobb–Douglas production function, we analyze the relationship between key inputs—capital and [...] Read more.

This paper investigates the impact of technological advancements, particularly the integration of the Internet of Things (IoT), on the efficiency and productivity of the postal service industry in Slovakia. By employing the Cobb–Douglas production function, we analyze the relationship between key inputs—capital and labor—and output for six major postal service providers: Slovak Post, Packeta, DHL Express, DPD, TNT Express, and GLS. Using data from 2017 to 2021, this study quantifies the elasticities of capital and labor to assess how IoT adoption influences operational performance. The regression analysis reveals significant variations in input contributions across companies, highlighting the diverse effects of IoT integration. Findings suggest that while some companies benefit more from capital investments in technology, others rely heavily on labor efficiency. These insights offer valuable implications for policymakers and industry stakeholders aiming to optimize resource allocation and enhance productivity through technological innovation. Full article

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23 pages, 3236 KiB

Open AccessArticle

State Regulation of the Digital Transformation of Agribusiness in the Context of the Climate Crisis Intensification

by Zauresh Imanbayeva, George Abuselidze, Akmaral Bukharbayeva, Kuralay Jrauova, Aizhan Oralbayeva and Maira Kushenova

Economies 2024, 12(10), 270; https://doi.org/10.3390/economies12100270 - 4 Oct 2024

Abstract

The research states that the exacerbation of the climate crisis observed in recent years is accompanied by an increase in ground-level temperatures, natural disasters, loss of water resources, and other extreme weather events, which significantly impact the economy, water, and food security of [...] Read more.

The research states that the exacerbation of the climate crisis observed in recent years is accompanied by an increase in ground-level temperatures, natural disasters, loss of water resources, and other extreme weather events, which significantly impact the economy, water, and food security of water-dependent countries and the expected consequences shortly. For this purpose, during this research, data from the Bureau of National Statistics of the Agency for Strategic Planning and Reforms of the Republic of Kazakhstan were studied, and a sample of private indicators of the country’s agribusiness digitalization potential was made, which were further normalized to construct a mathematical model of the correlation between the level of digitalization of the agricultural sector and the volume of water consumed by agribusiness. The feasibility of using agricultural notes (electronic agricultural receipts) in Kazakhstan’s agribusiness as an innovative tool for attracting funds to develop agricultural production is justified. It is highlighted that the agricultural note has the potential to become a successful tool for attracting funds for the digitalization of the agricultural sector, provided it acquires the status of a full-fledged market product, in which state regulation of Kazakhstan’s agribusiness digital transformation plays a significant role. Full article

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15 pages, 603 KiB

Open AccessArticle

Using Short Time Series of Monofractal Synthetic Fluctuations to Estimate the Foreign Exchange Rate: The Case of the US Dollar and the Chilean Peso (USD–CLP)

by Juan L. López, David Morales-Salinas and Daniel Toral-Acosta

Economies 2024, 12(10), 269; https://doi.org/10.3390/economies12100269 - 4 Oct 2024

Abstract

Short time series are fundamental in the foreign exchange market due to their ability to provide real-time information, allowing traders to react quickly to market movements, thus optimizing profits and mitigating risks. Economic transactions show a strong connection to foreign currencies, making exchange [...] Read more.

Short time series are fundamental in the foreign exchange market due to their ability to provide real-time information, allowing traders to react quickly to market movements, thus optimizing profits and mitigating risks. Economic transactions show a strong connection to foreign currencies, making exchange rate prediction challenging. In this study, the exchange rate estimation between the US dollar (USD) and the Chilean peso (CLP) for a short period, from 2 August 2021 to 31 August 2022, is modeled using the nonlinear Schrödinger equation (NLSE) and calculated with the fourth-order Runge–Kutta method, respectively. Additionally, the daily fluctuations of the current exchange rate are characterized using the Hurst exponent, H, and later used to generate short synthetic fluctuations to predict the USD–CLP exchange rate. The results show that the USD–CLP exchange rate can be estimated with an error of less than

5 %

, while when using short synthetic fluctuations, the exchange rate shows an error of less than

10 %

. Full article

(This article belongs to the Section Macroeconomics, Monetary Economics, and Financial Markets)

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23 pages, 939 KiB

Open AccessArticle

Effects of Corruption and Informality on Economic Growth through Productivity

by Pedro Bermúdez, Luis Verástegui, José Luis Nolazco and Dante A. Urbina

Economies 2024, 12(10), 268; https://doi.org/10.3390/economies12100268 - 2 Oct 2024

Abstract

Corruption and informality are issues which have attracted a great amount of empirical research, since they are variables that can affect economic development in various and complex ways, with direct and indirect effects on economic growth. In this context, the objective of this [...] Read more.

Corruption and informality are issues which have attracted a great amount of empirical research, since they are variables that can affect economic development in various and complex ways, with direct and indirect effects on economic growth. In this context, the objective of this investigation is to assess the impacts of corruption and informality on economic growth and productivity in countries from Latin America and the OECD (Organisation for Economic Co-operation and Development). To achieve this, a 3SLS-GMM estimation is proposed to manage the endogeneity of the variables in the system of equations. Subsequently, a simulation analysis is conducted to quantify the impacts of increases in corruption and informality on growth and productivity, as well as the influence of human capital in counteracting these impacts. The main findings of the research are as follows: (i) corruption decreases economic growth and productivity in both groups of countries; (ii) informality negatively affects economic growth and productivity; (iii) increases in corruption and informality reduce economic growth and productivity; and (iv) human capital has a positive impact on economic growth and reduces the negative impacts of corruption and informality. Full article

(This article belongs to the Special Issue Studies on Factors Affecting Economic Growth)

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18 pages, 346 KiB

Open AccessArticle

The Effect of ICT Usage on Economic Growth in the MENA Region: Does the Level of Education Matter?

by Mohammed N. Abu Alfoul, Ibrahim N. Khatatbeh and Ayman Hassan Bazhair

Economies 2024, 12(10), 267; https://doi.org/10.3390/economies12100267 - 1 Oct 2024

Abstract

This paper examines the effect of information and communication technology (ICT) usage on economic growth in the Middle East and North Africa (MENA) region, with a focus on how education levels modulate this relationship. Covering data from 2000 to 2020 and employing a [...] Read more.

This paper examines the effect of information and communication technology (ICT) usage on economic growth in the Middle East and North Africa (MENA) region, with a focus on how education levels modulate this relationship. Covering data from 2000 to 2020 and employing a panel ARDL model for analysis, this research finds that, while ICT is prevalent across MENA, its impact on economic growth is negative. Furthermore, it reveals that education plays a crucial role in determining ICT’s effectiveness on economic growth. However, the positive impact of education is overshadowed by the adverse effects of brain drain, which negates the potential benefits ICT could have on the economy. This study highlights the importance for MENA policymakers to address the brain drain issue to enhance the positive impact of ICT on economic growth, suggesting the need for strategies that leverage both ICT and education to effectively foster economic development. Full article

(This article belongs to the Special Issue Economic Development, Labour Markets, and Education in the Digital Age)

24 pages, 2259 KiB

Open AccessArticle

Utilizing Investment in Fixed Assets and R&D as a Catalyst for Boosting Productivity to Stimulate Economic Growth

by Assiya Atabayeva, Anar Kurmanalina, Gaukhar Kalkabayeva, Aigerim Lambekova, Ainur Myrzhykbayeva and Yerbolsyn Akbayev

Economies 2024, 12(10), 266; https://doi.org/10.3390/economies12100266 - 30 Sep 2024

Abstract

Investments form the basis for high-quality economic growth by ensuring renewal of production capacities and improvement of technologies and processes, thereby increasing labor productivity. Investment research is key to understanding its impact on the country’s economic advancement and more effective government policymaking to [...] Read more.

Investments form the basis for high-quality economic growth by ensuring renewal of production capacities and improvement of technologies and processes, thereby increasing labor productivity. Investment research is key to understanding its impact on the country’s economic advancement and more effective government policymaking to stimulate investment activity. The purpose of this paper is to study the relationship between fixed capital and R&D investments and labor productivity growth, as well as to determine the optimal level of these investments in determining the greatest effect on labor productivity growth. We use a regression model and the least squares method to empirically analyze data for seven countries for the period between 1997 and 2022. We calculate estimated values using SPSS and Python. The results show a certain impact of fixed assets and R&D investments on labor productivity growth. However, the payoff varies across the countries under study. Furthermore, despite its relatively small volumes, investment in R&D brings a greater effect on productivity growth than investment in fixed capital. With other factors remaining constant, the calculated optimums for investments in fixed assets and R&D show maximum points of growth in labor productivity. Full article

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22 pages, 1389 KiB

Open AccessArticle

Effect of Market-Wide Investor Sentiment on South African Government Bond Indices of Varying Maturities under Changing Market Conditions

by Fabian Moodley, Sune Ferreira-Schenk and Kago Matlhaku

Economies 2024, 12(10), 265; https://doi.org/10.3390/economies12100265 - 27 Sep 2024

Abstract

The excess levels of investor participation coupled with irrational behaviour in the South African bond market causes excess volatility, which in turn exposes investors to losses. Consequently, the study aims to examine the effect of market-wide investor sentiment on government bond index returns [...] Read more.

The excess levels of investor participation coupled with irrational behaviour in the South African bond market causes excess volatility, which in turn exposes investors to losses. Consequently, the study aims to examine the effect of market-wide investor sentiment on government bond index returns of varying maturities under changing market conditions. This study constructs a new market-wide investor sentiment index for South Africa and uses the two-state Markov regime-switching model for the sample period 2007/03 to 2024/01. The findings illustrate that the effect investor sentiment has on government bond indices returns of varying maturities is regime-specific and time-varying. For instance, the 1–3-year government index return and the over-12-year government bond index were negatively affected by investor sentiment in a bull market condition and not in a bear market condition. Moreover, the bullish market condition prevailed among the returns of selected government bond indices of varying maturities. The findings suggest that the government bond market is adaptive, as proposed by AMH, and contains alternating efficiencies. The study contributes to the emerging market literature, which is limited. That being said, it uses market-wide investor sentiment as a tool to make pronunciations on asset selection, portfolio formulation, and portfolio diversification, which assists in limiting investor losses. Moreover, the findings of the study contribute to settling the debate surrounding the efficiency of bond markets and the effect between market-wide sentiment and bond index returns in South Africa. That being said, it is nonlinear, which is a better modelled using nonlinear models and alternates with market conditions, making the government bond market adaptive. Full article

(This article belongs to the Special Issue Efficiency and Anomalies in Emerging Stock Markets)

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21 pages, 1074 KiB

Open AccessArticle

Asking Price for the Assessment of a Fruit Orchard: Some Evidence Using the Remote Segments Approach

by Giuseppe Cucuzza, Marika Cerro and Laura Giuffrida

Economies 2024, 12(10), 264; https://doi.org/10.3390/economies12100264 - 27 Sep 2024

Abstract

When missing reliable comparables, estimating inappropriately is a high risk in the use of both market-oriented and income approach methods. Therefore, it is useful to identify effective alternatives in accordance with the estimation method to arrive at the estimated value in the absence [...] Read more.

When missing reliable comparables, estimating inappropriately is a high risk in the use of both market-oriented and income approach methods. Therefore, it is useful to identify effective alternatives in accordance with the estimation method to arrive at the estimated value in the absence of comparables. This paper examines the use of the asking price for estimating the market value of a fruit tree orchard, missing comparable data of similar assets. The analysis was conducted by considering two different scenarios. In the first, asking prices from the same segment of the land to be estimated were used in two market-oriented appraisal methods: the General Appraisal System (GAS) and the Nearest Neighbors Appraisal Technique (NNAT). In both these approaches, market prices were replaced with detected asking prices. The second scenario was based on the use of the Remote Segments Approach (RSA). The comparison was conducted between the market segment of the fruit orchard to be valued and other comparison market segments, consisting of three other species of fruit trees, grown in the same area where the fruit orchard to be estimated is located. The results showed that in the first scenario, the estimated value appeared to be unreliable and excessively high compared to actual market conditions. Using the segment comparison method, which applies asking prices for the purpose of determining the capitalization rate, produced more reliable results. The appraisal also appeared more objective, transparent, and consistent with valuation standards. In the presence of similar limiting conditions, RSA can be an effective support to the activity of the appraiser in the valuation process of agricultural land. Full article

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19 pages, 315 KiB

Open AccessArticle

Taxes, Leverage, and Profit Shifting in Banks

by Arthur José Cunha Bandeira de Mello Joia, Lucas Ayres Barreira de Campos Barros and Marcelo Daniel Araujo Ermel

Economies 2024, 12(10), 263; https://doi.org/10.3390/economies12100263 - 26 Sep 2024

Abstract

The goal of this research is to investigate whether taxation affects the leverage decisions of banks and if the response of leverage to tax increases depends on profit-shifting opportunities available to individual banks. This topic remains controversial since it is often believed that [...] Read more.

The goal of this research is to investigate whether taxation affects the leverage decisions of banks and if the response of leverage to tax increases depends on profit-shifting opportunities available to individual banks. This topic remains controversial since it is often believed that banking regulation is such an essential driver of leverage choices that little room is left for other considerations studied in the corporate finance literature. Using a difference-in-differences setup encompassing the period from 2006 to 2017, we exploit two exogenous income tax rate increases applicable to 225 Brazilian banks, employing novel identification strategies based on the intricacies of local taxation rules and on the distinctions between individual banks and financial conglomerates. We find stark differences in the behavior of banks around the two events, with a substantial increase in leverage following the first tax hike but no leverage response following the second. In addition, we find no evidence of heterogeneous effects based on the amount of profit-shifting opportunities available to individual banks. Regulatory concerns possibly became more relevant for leverage decisions during the period around the second tax hike because it coincided with the implementation of stricter capital requirements associated with the Basel III framework. Taken together, our results suggest that financial institutions balance considerations regarding the tax-shield benefits of debt against regulatory concerns specific to the banking industry when making capital structure choices. Full article

(This article belongs to the Section Macroeconomics, Monetary Economics, and Financial Markets)

20 pages, 5259 KiB

Open AccessArticle

A Metrics Refinement of EU Fruit Production Economic Assessment

by Aleksandra Figurek, Elena I. Semenova, Alkis Thrassou and Demetris Vrontis

Economies 2024, 12(10), 262; https://doi.org/10.3390/economies12100262 - 25 Sep 2024

Abstract

The paper applies the farm accountancy data network (FADN) approach to conduct a comparison analysis of the revenue of EU fruit producers. The study constitutes a significant contribution to the requisite development of more accurate metrics and appropriate approaches, which are necessary for [...] Read more.

The paper applies the farm accountancy data network (FADN) approach to conduct a comparison analysis of the revenue of EU fruit producers. The study constitutes a significant contribution to the requisite development of more accurate metrics and appropriate approaches, which are necessary for assessing the economic success of EU fruit production in the principal sector of EU agriculture. The metrics used to measure the economic success in fruit production include farm net value added (FNVA), farm net income (FNI), annual working unit (AWU) of FNVA, and farm family income (FFI/FWU). An agricultural farm’s overall productivity can be determined by dividing its entire output (production) by the inputs employed in its operations, such as specific expenses and intermediate consumption. The FADN approach, which tracks the increase in agricultural revenue and assesses the effects of European policies on the agricultural sector, improves monitoring and meeting of performance goals. Finding economic, technological, and other aspects that will improve agricultural farms’ businesses and, by extension, agriculture as a whole will require applying an appropriate methodological approach to portray the actual situation and results of these farms. Full article

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14 pages, 676 KiB

Open AccessArticle

Association between Education and Fertility: New Evidence from the Study in Pakistan

by Khawar Afreen, Patrizia Ordine and Giuseppe Rose

Economies 2024, 12(10), 261; https://doi.org/10.3390/economies12100261 - 25 Sep 2024

Abstract

Pakistan is one of those nations that is suffering from the complications of higher fertility and lower levels of education and struggling to improve these demographic factors. In any country, education is considered the reason to control fertility levels. To shed some light [...] Read more.

Pakistan is one of those nations that is suffering from the complications of higher fertility and lower levels of education and struggling to improve these demographic factors. In any country, education is considered the reason to control fertility levels. To shed some light on the importance of this fact, education attainment and total children ever born have been considered by taking micro-level data from the Pakistan Demographic Health Survey (PDHS) of 2017–2018 to examine the relationship of education with fertility for women. Due to the nature of the response variable, children ever born, which is a count variable, Poisson regression was used. The results provide evidence that women with secondary and higher education have a negative and significant association with fertility and thus support the hypothesis that educated women have lower fertility. Women with secondary and higher education have fewer children compared to women with no education, while female education at the primary level did not significantly affect fertility in the research. Furthermore, the age of first cohabitation, age at first birth, and wealth index were revealed to be significant determinants of fertility. It interprets that the increase in education is related to greater opportunities and facilitates the participation of women in other activities of the economy. Full article

(This article belongs to the Section Labour and Education)

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17 pages, 1348 KiB

Open AccessArticle

Energy Cost Reduction in the Administrative Building by the Implementation of Technical Innovations in Slovakia

by Katarína Teplická, Samer Khouri, Ibrahim Mehana and Ivana Petrovská

Economies 2024, 12(10), 260; https://doi.org/10.3390/economies12100260 - 25 Sep 2024

Abstract

The presented article investigates the effects of technical innovations in administrative buildings on the financial side of the business, with a main focus on reducing energy costs and energy consumption. The administrative buildings in a business contribute significantly to the business’s total energy [...] Read more.

The presented article investigates the effects of technical innovations in administrative buildings on the financial side of the business, with a main focus on reducing energy costs and energy consumption. The administrative buildings in a business contribute significantly to the business’s total energy consumption. The basic pillar of Industry 4.0 is the optimization of resources such as energy, which, in production enterprises, represents economic value—costs. The article is orientated to investigate the effect of the technical innovations of administrative buildings on the financial side of the enterprise, with a main focus on reducing energy costs and energy consumption. This research was conducted in Slovakia’s manufacturing sector. In this research, we used economic and financial analysis and economic indicators. This research was conducted between 2019 and 2023. In this period, the results were positive. The results indicated a reduction in energy consumption of 143 GJ (39,722 kWh), reduced energy costs of EUR 6356, reduction in the energy cost structure of 1.3%, and the indicator, the payback period, was determined to be in the range of 6 to 12 years for individual technical innovations. The new design of administrative buildings is an advantage for manufacturing enterprises and can be used as a marketing tool to attract both customers and suppliers. The suggested energy, environmental, and economic sustainability model will allow production enterprises to improve their energy use in administrative buildings. Full article

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23 pages, 1283 KiB

Open AccessArticle

Impact of Energy Crises on Income Inequality: An Application of Piketty’s Hypothesis to Pakistan

by Jibran Hussain, Saeed Siyal, Riaz Ahmad, Qaiser Abbas, Yu Yitian and Liu Jin

Economies 2024, 12(10), 259; https://doi.org/10.3390/economies12100259 - 24 Sep 2024

Abstract

In Pakistan, the majority of people have access to energy supplies. However, people who are underprivileged, below the extreme poverty line, or part of the middle class often spend disproportionate portions of their income on energy supplies and services, to some extent because [...] Read more.

In Pakistan, the majority of people have access to energy supplies. However, people who are underprivileged, below the extreme poverty line, or part of the middle class often spend disproportionate portions of their income on energy supplies and services, to some extent because of higher upfront prices for energy supplies, expensive products, and expensive imported appliances. The nonavailability of low-cost energy supplies is mainly affecting underdeveloped regions that have mostly low-income households. We used the dynamic ordinary least squares method to look at the impact of the energy crisis on income inequality from 1997 to 2021. The results show that the energy crisis exacerbates income inequality as low-income groups end up spending more significant shares of their income on energy products, supplies, and services than higher-income groups. Fair and equal access to energy supplies and services is less likely to reduce income inequality if prices are not cost-efficient. Cautious deliberation regarding the structure of energy tariffs is inevitable; at the same time, safety nets and social security programs for the poorest groups need to be expanded. At this stage, the aim is to target energy prices that will achieve the objectives of reducing polarity and increasing real income. Full article

(This article belongs to the Special Issue Income Distribution, Inequality and Poverty: Evidence, Explanations and Policies)

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24 pages, 3939 KiB

Open AccessArticle

Assessing the Pandemic Aviation Crisis: Speculative Behavior, Government Bail Outs, and Accommodative Monetary Policy

by Viviana Costa, Maria Alberta Oliveira and Carlos Santos

Economies 2024, 12(10), 258; https://doi.org/10.3390/economies12100258 - 24 Sep 2024

Abstract

The COVID-19 pandemic was a health, economic, and financial crisis. The aviation sector was one of the most severely hit. Despite the extensive literature on this, COVID-Finance has been focused on stock returns, neglecting what could be learnt from the spreads of airlines’ [...] Read more.

The COVID-19 pandemic was a health, economic, and financial crisis. The aviation sector was one of the most severely hit. Despite the extensive literature on this, COVID-Finance has been focused on stock returns, neglecting what could be learnt from the spreads of airlines’ credit default swaps (CDSs). This would seem of the utmost importance, given the epicenter of the crisis within the credit market. In this paper, an in-depth analysis of airlines’ CDS spreads is conducted. It is found that they were severely hit, for all airlines studied. However, the results of the PSY test showed that speculative trading led the surge, as explosive roots were found in the spreads of all these aviation firms. The dramatic increase in CDS spreads has contributed to already high borrowing costs for airlines. Our results suggest that aviation bail outs have helped to mitigate spreads’ explosiveness. Monetary policy measures have also limited, albeit indirectly, the funding risk posed by the government bail outs. By the end of March 2021, spreads were no longer explosive, and were approaching, at highly heterogeneous paces, their pre-pandemic values. Notwithstanding, airlines’ stock prices have been notably resistant to recovery. Full article

(This article belongs to the Section Macroeconomics, Monetary Economics, and Financial Markets)

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20 pages, 1392 KiB

Open AccessArticle

Parallel Currencies under Free Floating Exchange Rates: A Model Setting Out the Conditions for Stable Currency Competition

by Juan E. Castañeda, Sebastian Damrich and Pedro Schwartz

Economies 2024, 12(10), 257; https://doi.org/10.3390/economies12100257 - 24 Sep 2024

Abstract

We use a theoretical model to set up the conditions for a country to attain monetary stability by allowing for two freely tradable currencies to circulate in parallel. For this parallel system to function properly, confidence in the good behavior of the monetary [...] Read more.

We use a theoretical model to set up the conditions for a country to attain monetary stability by allowing for two freely tradable currencies to circulate in parallel. For this parallel system to function properly, confidence in the good behavior of the monetary authorities in charge of the two currencies is key. Our model shows how a floating exchange rate between the two can keep the issuers of the local currency in check. The results from our model show the conditions under which a parallel currency system disciplines the issuers of the currencies and thus maintains their purchasing power. In non-volatile economies, it also discourages governments (or private issuers) from inflating one of the currencies as a means to raise seigniorage, as this policy results in the displacement of the currency from the market. When foreign payments shortfall—such as in Greece and Cyprus during the ‘euro crisis’ in the mid-2010s, or intractable hyperinflation—leave the country without a medium of exchange, our model shows how currency choice can restore monetary circulation and offer a path to achieving and maintaining monetary stability. Full article

(This article belongs to the Special Issue Monetary Policy and Central Banking: Challenges in the Current Environment)

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22 pages, 1838 KiB

Open AccessArticle

The Impact of Restrictive Macroprudential Policies through Borrower-Targeted Instruments on Income Inequality: Evidence from a Bayesian Approach

by Lindokuhle Talent Zungu and Lorraine Greyling

Economies 2024, 12(9), 256; https://doi.org/10.3390/economies12090256 - 23 Sep 2024

Abstract

This study used the panel data from 15 emerging markets to examine the impact of restrictive macroprudential policies on income inequality from 2000–2019 using Bayesian panel vector autoregression and Bayesian panel dynamics generalised method of moments models. The chosen models are suitable for [...] Read more.

This study used the panel data from 15 emerging markets to examine the impact of restrictive macroprudential policies on income inequality from 2000–2019 using Bayesian panel vector autoregression and Bayesian panel dynamics generalised method of moments models. The chosen models are suitable for addressing multiple entity dynamics, accommodating a wide range of variables, handling dense parameterisation, and optimising formativeness and heterogeneous individual-specific factors. The empirical analysis utilised various macroprudential policy proxies and income inequality measures. The results show that when the central banks tighten systems using macroprudential policy instruments to sticker debt-to-income and financial instruments for lower-income borrowers (the bottom 40% of the income distribution), they promote income inequality in these countries while reducing income inequality for high-income borrowers (the high 1 percent of the income distribution). The impact of loan-to-value ratios was found to be insignificant in these countries. Fiscal policy through government expenditure and economic development reduces income inequality, while money supply and oil-price shocks exacerbate it. The study suggests implementing a progressive debt-to-income (DTI) ratio system in emerging markets to address income inequality among lower-income borrowers. This would adjust DTI thresholds based on income brackets, allowing lenient credit access for lower-income borrowers while maintaining stricter limits for higher-income borrowers. This would improve financial stability and reduce income disparities. Additionally, targeted financial literacy programs and a petroleum-linked basic income program could be implemented to distribute oil revenue to lower-income households. A monetary supply stabilisation fund could also be established to maintain financial stability and prevent excessive inflation. Full article

(This article belongs to the Special Issue Monetary and Fiscal Economics in the Context of Macroeconomic Stability)

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