Search Results (123)

This study examines the impacts of digital transformation on employment and labor productivity in the Gulf Cooperation Council (GCC) countries from 2000 to 2022 using a composite Digital Economy and Society Index (DESI) and a panel ARDL model. The results reveal a productivity paradox: digitalization is negatively related to labor productivity, despite significant investments in ICT and widespread digital adoption. In contrast, overall employment increases, driven by growth in the industrial sector, while employment in the agriculture and service sectors is found to decline. These findings highlight the mixed effects of digitalization—creating jobs without corresponding productivity gains—and emphasize the need for policies that improve skills, encourage organizational innovation, and support sectoral adaptation to fully harness digital technologies for sustainable economic growth. Full article

This paper examines the effect of trade openness on corporate tax revenue in the Middle East and North Africa (MENA) region, where increased economic integration might incite more business activity and expand taxable corporate income but also intensify losses due to practices such as profit shifting. The study follows a quantitative empirical approach and applies a panel ARDL model to secondary data collected from international databases (World Bank and IMF), such as GDP, trade openness (exports and imports as % of GDP), inflation, corporate tax revenues, foreign direct investment inflows and tax evasion via informal economies, for a sample of ten developing countries from the MENA region, including Morocco, Tunisia, Egypt, Jordan, Lebanon, Algeria, Saudi Arabia, Oman, the United Arab Emirates, and Bahrain, over the period 2010–2023. We employ a PMG ARDL model to study our panel data, allowing the analysis of both short-run and long-run effects to investigate the relationship between trade openness and tax revenues. Our results show that in the long run, export-driven economies generate higher corporate tax revenues by expanding profitability and the tax base, and imports also positively affect revenues, indicating that trade openness stimulates economic activity. Conversely, FDI inflows reduce corporate tax revenues, consistent with profit shifting and tax incentives in developing countries. GDP growth does not necessarily increase tax receipts, likely due to tax elasticity effects and growth-oriented tax structures. Also, tax evasion appears to decline, likely reflecting improved compliance, and no significant short-run effects are observed. The results contribute to the literature on tax compliance and economic integration in the case of open economies in developing countries. From a practical perspective, our findings have implications for policymakers and tax regulators in the MENA region, as they highlight the dual nature of globalization for developing countries and their tax systems and underscore the need for effective compliance measures in trade and investment policies. Full article

This study analyzes the long-run relationships between digitalization, investment, innovation, and economic growth in connection with the energy transition in the SPRING-F group (Spain, Poland, Romania, Italy, the Netherlands, Germany, and France) using annual data for the period of 2000–2024. The analysis starts from the premise that digitalization affects economic performance not only directly, but also through structural transmission mechanisms linked to investment and the energy transition. To capture these dynamics, this study employs three complementary panel ARDL models. The first model explains economic growth (GDP per capita) as a function of digitalization, capital accumulation, R&D expenditure, renewable energy consumption, trade openness, and foreign direct investment. The second model estimates gross capital formation (GCF) in order to assess the investment transmission channel. The third model explains renewable energy consumption (RNEC) in order to capture the sustainability dimension. The results show that trade openness and capital accumulation are the strongest long-run drivers of economic growth in the SPRING-F group. Internet use, R&D expenditure, and FDI also display positive long-run associations with GDP per capita, whereas fixed broadband subscriptions and renewable energy consumption enter the growth equation with negative coefficients, suggesting that digital infrastructure and the green transition do not automatically generate immediate growth gains. The GCF model confirms that investment acts as an important transmission mechanism, especially through the robust GDP–GCF linkage. The RNEC model indicates that the energy transition is positively associated with investment, innovation, and trade openness, while GDP and digital infrastructure remain negatively associated with the renewable energy share. Overall, the findings point to a conditional and nonlinear relationship between growth, digitalization, investment, and sustainability, with the sustainability channel remaining more specification-sensitive than the growth and investment equations. The long-run results for the GDP equation should also be interpreted with additional caution, given the comparatively weaker cointegration evidence for Model 1. Full article

This paper investigates the interaction between fiscal policy and non-performing loans (NPLs), a nexus often overlooked in banking stability literature. By proposing a generalized theoretical framework that augments the industrial organization (IO) theory of banking with liquidity preference theory, this study explains why a fiscal contraction (an improvement in the primary balance from deficit toward surplus) can decrease NPLs in a bank’s portfolio. Using bank-level quarterly data from Guyana (2009: Q4 to 2024: Q4) and a Panel Autoregressive Distributed Lag Pooled Mean Group (ARDL-PMG) model, we find that a fiscal contraction reduces NPLs in the long run. Specifically, a one-percentage-point improvement in the seasonally adjusted primary balance (as a % of GDP) is associated with a 0.473 percentage point decrease in NPLs in the long run. This finding contrasts with the existing literature, which often suggests that fiscal consolidations increase credit risk. In the short run, however, the results indicate a divergent effect where fiscal contractions lead to a temporary increase in NPLs, with a coefficient of 0.103, likely because of immediate pressure on borrower debt-service capacity. This study contributes to the literature by extending the IO theory of banking to the fiscal policy–NPL relationship in a developing, resource-rich economy. Notably, while higher oil prices and bank efficiency significantly lower NPLs, traditional macroeconomic drivers such as GDP growth, inflation, and the real effective exchange rate—as well as the COVID-19 pandemic—are found to be statistically insignificant in this framework. Full article

The inflation rate has shown an upward trend globally, specifically after COVID-19, and the economies of the Gulf Cooperation Council (GCC) are not an exception. A heightened inflation in the modern globalized world is indeed undesirable due to its enormous adverse consequences on all sectors of the economy. However, the true determinants of the inflation rate, particularly in the case of GCC economies, are not well-explored. Accordingly, this research paper attempts to see whether the inflation rate in GCC economies is driven by internal factors or global factors. This paper focuses on data for the period 1998 to 2023 and applies the PMG-ARDL methodology for the estimation. The results confirmed that money supply, oil prices, GDP, and global supply chain pressure are the key inflationary drivers in the long run. In contrast, trade openness has reduced the inflation rate in the long run, which is consistent with the prediction of Romer’s hypothesis. In the short run, we found that real GDP and trade openness are the main driving forces behind the heightened inflation rate. Furthermore, the causality findings indicated several unidirectional and bidirectional relationships among the variables under consideration. Our results are robust to alternative econometric estimators and hence offer valuable policy implications for the consideration of policymakers. Full article

The volatility of oil prices has a considerable impact on the economies of oil-exporting countries, making it critical to understand how price variations affect labour markets and unemployment. This study investigates the distinct role of labour market institutions in moderating the effects of oil price volatility on unemployment. Using the Cross-Sectionally Augmented Autoregressive Distributed Lag Model (CS-ARDL) on a panel dataset of nine African oil-exporting countries from 1994 to 2024, the study establishes a strong negative link between oil price changes and unemployment. Furthermore, the results show that real GDP growth leads to a reduction in unemployment in the long run, while the labour market institutional index has a negative impact on unemployment. Interacting the oil price with the labour market institutional index causes a further reduction in unemployment. These results suggest that good labour market institutions and macroeconomic stability are essential for reducing unemployment. While increases in oil prices directly stimulate a reduction in unemployment in African oil-exporting countries, this impact is reinforced by the presence of good labour market institutions in an economy. Therefore, the results suggest that countries with strong labour market institutions are more resilient in reducing the negative impact of oil price volatility on employment. As such, policymakers must prioritise labour market institutional reforms to enhance countries’ capacity to absorb oil price shocks and reduce unemployment during periods of oil prosperity and shield against employment declines when oil prices drop. Furthermore, the creation of oil stabilisation funds in these countries may serve a similar purpose. Contribution/originality: Against a background of inconclusive empirical evidence in the literature and a dearth of research on African countries, this study investigates the role of labour market institutions (LMIs) in the oil price–unemployment nexus in African oil-exporting countries. While highly dependent on oil revenue, these countries record persistent structural unemployment. Therefore, the study provides critical evidence to guide the formulation of policies necessary to deal with external shocks and facilitate structural shifts required for employment growth. Existing studies consider general institutional variables such as democratic accountability and the rule of law and do not assess the effect of labour market institutions. The current study fills in this gap by assessing the distinct role of labour market institutions that are specifically designed to regulate only work-related activities, such as quality of labour regulations, adequacy of social protection and unemployment benefits. Furthermore, this study employed the cross-sectionally augmented autoregressive distributed lag (CS-ARDL) for econometric estimations. Compared to previous studies, this is a more appropriate method that accounts for unobserved common factors such as oil price shocks affecting all oil-exporting countries simultaneously. Full article

The global transport sector stands at a critical juncture where economic growth imperatives intersect with urgent environmental sustainability challenges. This paper investigates the impact of air freight transport, digitalisation, energy consumption, economic growth, and regulatory quality on CO₂ emissions in Gulf Cooperation Council (GCC) countries. Despite the region’s strategic importance in global air freight networks and rapid digital transformation, empirical evidence on how these factors collectively influence environmental sustainability remains limited. GCC countries provide a unique context for examining the digitalisation–transport–environment nexus. Using panel data from six GCC member states spanning 1999–2022, this study employs a second-generation autoregressive distributed lag (CS-ARDL) model to analyse short- and long-run relationships while accounting for cross-sectional dependence and heterogeneity. The empirical model designates CO₂ emissions as the dependent variable, while the digitalisation indicator, air freight transport, and energy consumption serve as principal explanatory variables. The empirical findings indicate that energy consumption and economic growth are significant drivers of CO₂ emissions in GCC countries, while digitalisation is associated with lower emissions. Regulatory quality exhibits a weaker but non-negligible negative influence. Moreover, air freight transport does not display a significant long-run effect on emission in the GCC context. These findings are robust across multiple panel estimators. The research provides evidence-based guidance for GCC national vision programmes, green aviation initiatives, and digital transformation strategies, contributing to a sustainable development discourse in resource-rich economies. Full article

This study assesses the role of institutional quality, macroeconomic performance, and environmental pressures in shaping food security in East Asia. Using a PMG-ARDL panel model with data from China, Singapore, and Japan—three economies characterized by high institutional standards—the analysis covers the period 1996–2023. The findings highlight a strong and statistically significant long-term effect of institutional quality on food production, underlining the essential role of governance in reducing regulatory uncertainty, attracting agricultural investment, and enabling coherent policy frameworks. The CO₂ emissions growth also exhibits a significant negative impact, underscoring that climate change poses a structural threat to food security. Control variables show that population growth and macroeconomic stability enhance food security, reflecting an ability to adapt to demand. In contrast, the effect of inflation is insignificant in the long term. In the short term, the analysis reveals heterogeneity in adjustment. The ECT is negative and significant for Singapore, indicating an effective return to long-term equilibrium. In contrast, it is insignificant for Japan and China, suggesting a lack of automatic convergence due to structural specificities in the short term. Overall, the study demonstrates that sustainable food security in advanced East Asian economies relies not only on productive capacity, but also on effective governance, macroeconomic stability, and the integration of climate considerations into long-term policy strategies. Full article

Decoupling between CO₂ emissions and economic growth is critical to reversing climate change. The OECD plays a crucial role in this regard, given its considerable share of global CO₂ emissions and GDP. This study examines the decoupling performance and the roles of renewable energy transition, as well as specific eco-innovations on climate change mitigation and environmental technology development across the OECD economies. The preliminary tests on a large panel of OECD countries identify cross-sectional dependence, structural breaks and heterogeneity. For robustness, the study proposes Fourier-CS-ARDL, Fourier-AMG, and Fourier–Dumitrescu–Hurlin methods as generalizations of their linear counterparts. After identifying cointegration and its singularity with Fourier-bootstrapping bounds and Fourier–Johansen tests, the modeling stage suggested a positive, but significantly inelastic long- and short-run elasticity of emissions to economic growth. Most of these effects are reversed by renewable energy transition in the long run and partially reversed in the short run. These CO₂ mitigation effects are also evident across different eco-innovations with varying temporal impacts. Novel Fourier causality tests identify feedback loops between CO₂ and CO₂-mitigating factors, as well as unidirectional causality from growth to all mitigating factors, confirming the indirect effect of growth on CO₂ mitigation. Overall, these results clearly suggest “relative” decoupling in OECD accompanied by CO₂e mitigation effects from eco-innovations and energy transition, and highlight the potential for green growth following the successful adaptation of energy transition and eco-innovations. Policymakers in OECD are encouraged to leverage the identified feedback mechanisms and establish international technology transfer policies to homogenously curb CO₂ emissions. Full article

The quality of governance is a key driver of resource mobilisation in a context marked by successive shocks that exacerbate fiscal imbalances. This study aims to analyse the role of institutional quality in the relationship between public expenditure and tax revenue in a panel of 162 countries, broken down into developed and emerging economies between 2000 and 2023. Using causality tests and the cross-sectional autoregressive model with staggered lags (CS-ARDL) to control for cross-sectional heterogeneity and cross-dependence, the results reveal a bidirectional causality linking expenditure and revenue for the entire panel; emerging countries are more sensitive to fiscal policies; public expenditure significantly stimulates tax revenue in the short and long term, with an effect amplified by institutional quality; long-term sustainability depends crucially on the institutional framework. This study highlights the need for targeted institutional reforms and fiscal rules differentiated according to countries’ level of economic development. Full article

This study examines the determinants of profitability for 21 Bulgarian commercial banks over the period from the first quarter of 2007 to the first quarter of 2025, using financial statement data. Bank profitability is measured by return on assets (ROA) and return on equity (ROE) and modeled within a panel autoregressive distributed lag (PMG-ARDL) framework. The empirical specification combines bank-specific and macroeconomic variables, allowing for the identification of both long-run equilibrium relationships and short-run bank-level dynamics. The long-term results indicate that the net interest margin (NIM), net fee and commission margin (NFM), government bond yields, the growth of the gross domestic product (GDP), and the loan-to-deposit ratio (LDR) positively affect profitability. On the other hand, higher unemployment, rising housing prices, increased loan loss impairments, and the ratio of cash holdings to total assets reduce profitability. The findings provide policy-relevant insights for bank management, regulators, and macroprudential authorities regarding efficiency, income diversification, and credit risk management. The findings facilitate a more comprehensive assessment of banking sector resilience and provide a foundation for the development and refinement of macroprudential and supervisory policy measures. Full article

This study analyses the long-run relationship between governance quality and renewable energy development using a global panel of 174 countries over the period 2000–2023. The objective is to assess whether institutional quality systematically influences renewable energy deployment across heterogeneous development contexts. The empirical analysis employs a panel autoregressive distributed lag (PMG-ARDL) framework, which accommodates mixed integration orders and allows for heterogeneous short-run dynamics while imposing homogeneity on long-run coefficients. Renewable energy consumption, measured as the share of renewable energy in total final energy consumption, is modelled as a function of governance quality indicators, economic development, and environmental pressure, with trade openness and foreign direct investment included as control variables. Panel unit root tests indicate a mixture of I(0) and I(1) variables, supporting the use of the ARDL framework, while panel cointegration tests provide strong evidence of a stable long-run relationship in the estimated model. The results reveal a statistically significant long-run association between governance quality and renewable energy development, although the magnitude and direction of the effects vary across governance dimensions and development levels. In contrast, short-run effects are generally weak, suggesting that governance primarily shapes renewable energy outcomes through gradual, structural channels. These findings highlight the importance of institutional quality for long-term energy transition processes and provide empirically grounded insights for the design of energy and governance policies. The analysis reveals significant heterogeneity across development contexts: governance improvements yield positive effects on renewable energy adoption in low-income countries (β = +3.77), where institutional deficits constitute binding constraints, whilst the effect becomes negative in high-income economies (β = −11.87), reflecting diminishing returns and infrastructure lock-in. These findings suggest that developing countries should prioritise governance reforms—particularly Regulatory Quality and Political Stability—to accelerate energy transitions, whereas advanced economies should shift policy attention toward grid modernisation and market design. International organisations should adopt differentiated climate finance strategies matching institutional support to the development stage. Full article

The worldwide move toward renewable energy indicates a fundamental change that is particularly important in the MENA region, which has abundant renewable resources and has depended on hydrocarbon economies. This study presents an empirical examination of key macroeconomic determinants—inflation, fiscal policy, and economic volatility—on renewable energy security in MENA countries from 2000 to 2023. Applying a Panel Autoregressive Distributed Lag (ARDL) model of 16 countries, we assess the short-run dynamic and long-run equilibrium relationships, where renewable energy security is measured using the share of renewable electricity in total generation. These results support the existence of a significant long-run cointegrating relationship. We find fiscal policy to have a positive effect on renewable energy security, while inflation and economic volatility have significant negative short- and long-term effects. The error-correction term of −0.421 signaled a relatively fast return to long-run equilibrium. We conclude that sound management of these macroeconomic variables—especially price stability and counter-cyclical fiscal policies—is an essential precondition for achieving renewable energy security in the MENA region. Our policy implications highlight the need to support stable investment inquiries led by coordinated monetary, fiscal, and energy policies aimed at creating the conditions for renewable energy security. Full article

This study develops an integrated panel econometric framework for modeling investment–output dynamics in circular economy sectors, explicitly addressing dynamic propagation, long-run equilibrium relationships, endogeneity, and nonlinear responses. Building on the Samuelson–Hicks Multiplier–Accelerator model, the analysis combines two complementary approaches. A dynamic panel specification estimated by the Generalized Method of Moments (Arellano–Bond) is employed to capture output inertia, intertemporal transmission of investment shocks, and stability properties of the dynamic system. In parallel, a nonlinear panel ARDL model estimated using the Pooled Mean Group (PMG/NARDL) methodology is used to identify cointegration and to distinguish between the long-run and short-run effects of positive and negative investment variations. The empirical analysis relies on a balanced panel of 28 European economies (EU-27 and the United Kingdom) over the period 2005–2023, using sectoral circular economy data, with gross value added as the output variable and gross private investment as the main regressor. The results indicate the existence of a stable cointegrated relationship between investment and output, characterized by significant asymmetries, with expansionary investment shocks exerting larger and more persistent effects than contractionary shocks. Dynamic GMM estimates further confirm delayed investment effects and a stable autoregressive structure. Overall, the paper contributes to mathematical economic modeling by providing a unified dynamic–equilibrium panel framework and by extending the empirical relevance of Multiplier–Accelerator dynamics to circular economy systems. Full article

In recent years, industry development has become closely connected with Information and Communication Technology (ICT) and trade openness. This research explores how industry, ICT, economic activity, and trade openness affect the environment, highlighting the importance of investing in low-carbon technologies and energy-efficient machinery. The goal of this research is to investigate the short- and long-run impacts of industrialization, ICT, economic activity, and trade openness on per capita carbon emissions in Lithuania from 2000 to 2024. This study employs the ARDL econometric model along with several diagnostic tests. The Breusch–Godfrey Serial Correlation test indicated no serial correlation, while the Breusch–Pagan–Godfrey test indicated no heteroscedasticity. The Ramsey RESET test confirmed that the model specification is appropriate and significant for the research. Additionally, the VIF test for multicollinearity indicates that no multicollinearity exists among the research variables. The research results show that industrialization and economic activity are positively associated with per capita carbon emissions and environmental harm. In contrast, trade openness and ICT are negatively associated with per capita carbon emissions in Lithuania, thereby contributing to environmental sustainability. The novelty of this research: a specific combination of variables combining key structural (industrialization), integration (trade openness), and digital diffusion (ICT penetration) determinants of CO₂ emissions within a specific single-country context, applying the ARDL framework for the Baltic EU member state, Lithuania. While prior studies primarily relied on multi-country panels and often treat ICT through heterogeneous proxies, this study operationalizes ICT as internet-user penetration to capture digital integration effects—an important distinction for small open economies where energy-intensive digital infrastructure may be located abroad. By separating short-run from long-run dynamics, the analysis offers evidence on how the environmental effects of openness, growth, and digitalization unfold over time, using recent data up to 2024 and providing policy recommendations encouraging decarbonization strategies. Full article