Energy, unemployment and trade

© 2018 Informa UK Limited, trading as Taylor & Francis Group. This article investigates the dynamic relationships among sectoral economic activities, macro expenditure patterns, renewable and non-renewable energy consumption and unemployment in 41 countries from 1980 to 2014. The state of the art econometric techniques, both linear and non-linear panel and time series estimation techniques are used. The results show that industrialization, services sector, government expenditure and trade openness play a positive role in reducing unemployment, while agriculture and renewable energy consumption increase unemployment. This might be, in part, due to recent technological advancements and large capital intensive investments in agriculture and renewable energy sectors. Therefore, dedicated social and labour market policies need to be adopted to complement greening economic policies

Tests of the co-integration rank in VAR models in the presence of a possible break in trend at an unknown point

In this paper we consider the problem of testing for the co-integration rank of a vector autoregressive process in the case where a trend break may potentially be present in the data. It is known that un-modelled trend breaks can result in tests which are incorrectly sized under the null hypothesis and inconsistent under the alternative hypothesis. Extant procedures in this literature have attempted to solve this inference problem but require the practitioner to either assume that the trend break date is known or to assume that any trend break cannot occur under the co-integration rank null hypothesis being tested. These procedures also assume the autoregressive lag length is known to the practitioner. All of these assumptions would seem unreasonable in practice. Moreover in each of these strands of the literature there is also a presumption in calculating the tests that a trend break is known to have happened. This can lead to a substantial loss in finite sample power in the case where a trend break does not in fact occur. Using information criteria based methods to select both the autoregressive lag order and to choose between the trend break and no trend break models, using a consistent estimate of the break fraction in the context of the former, we develop a number of procedures which deliver asymptotically correctly sized and consistent tests of the co-integration rank regardless of whether a trend break is present in the data or not. By selecting the no break model when no trend break is present, these procedures also avoid the potentially large power losses associated with the extant procedures in such cases

Empirical Evidence on Inflation and Unemployment in the Long Run

We examine the relationship between inflation and unemployment in the long run, using quarterly US data from 1952 to 2010. Using a band-pass filter approach, we find strong evidence that a positive relationship exists, where inflation leads unemployment by some 3 to 3 1/2 years, in cycles that last from 8 to 25 or 50 years. Our statistical approach is atheoretical in nature, but provides evidence in accordance with the predictions of Friedman (1977) and the recent New Monetarist model of Berentsen, Menzio, and Wright (2011): the relationship between inflation and unemployment is positive in the long run

Consequences of Covid-19 on the Social Isolation of the Chinese Economy: Accounting for the Role of Reduction in Carbon Emissions

The main contribution of the present study to the energy literature is linked to the interaction between economic growth and pollution emission amidst globalization. Unlike other studies, this research explores the effect of economic and social isolation as a dimension of globalization. This allows underpinning the effects on the Chinese economic development of the isolation phenomenon as a consequence of coronavirus (COVID-19). To this end, annual time frequency data is used to achieve the hypothesized claims. The study resolutions include (i) The existence of a long-run equilibrium bond between the outlined variables (ii) The long-run estimates suggest that the Chinese economy over the investigated period, is inelastic to pollutant–driven economic growth as reported by the dynamic ordinary least squares, fully modified ordinary least squares and canonical regressions with a magnitude of 0.09%. (iii) The Chinese isolation is less responsive to its economic growth while the country political willpower is elastic as demonstrated by current government commitment to dampen the effect of the COVID-19 pandemic. This is marked by the aggressive response on the government officials resolute by flattening the exponential impact of the pandemic. Based on these robust results some far-reaching policy implication(s) are underlined in the concluding remark section