Exchange rate and trade balance in east asia: is there a J-curve?

This paper examines the short run and long run effects of real exchange rate changes on the real trade balance of three ASEAN countries in their bilateral trade to the US and Japan within a cointegrating vector error correction model (VECM). Generalized impulse response funtions are estimated to investigate the response to shocks. VECM estimates suggest one long-run steady-state cointegrating relationship among real trade balance, real exchange rate, real domestic and foreign income in each country. Although considerable variations exist in the results, overall the generalized impulse response functions suggest that the Marshall-Lerner condition holds in the long-run with varying degree of J-curve effects in the short-run.ASEAN Countries

United States-China Trade War and the Emergence of Global Covid-19 Pandemic

This paper asserts that the retaliatory trade wars between the United States and China contributed to the emergence of the global COVID-19 pandemic because the trade wars hindered the collaboration, coordination, and transparent information sharing about infectious diseases that could have adverse effects on the global economy. The retaliatory trade wars between the two largest economies in the world turned the symmetric information sharing about global infectious diseases to asymmetric information sharing, thus the inability to prepare for the emergence of the current global COVID-19 pandemic shock. In the first two decades of the 21st century, the World Health Organization (WHO) in collaboration, coordination, and transparent information sharing with global health care systems managed to curtail the outbreaks of the severe acute respiratory syndrome (SARS) in 2002-2003, H1N1 in 2009, Ebola in 2014, Zika in 2015, Dengue in 2016, and other deadly infectious diseases. We maintain that the symmetric information sharing enabled the WHO and the other global health care systems to build the firewall against these deadly infectious diseases. The absence of collaboration, coordination, and the symmetric information sharing due to the trade wars forced both countries to resort to information distortions; therefore, the inability to prepare for the global COVID-19 pandemic. Using conceptual economics, we show that the confluence of the retaliatory trade wars and COVID-19 pandemic has significant negative ramifications on economies worldwide

MODELING STATE AGRICULTURE: AN APPLICATION AND SOME IMPLICATIONS

A disaggregated econometric model of the agricultural sector at the state level is constructed. Using time series data on West Virginia agriculture and three-stage least squares in estimation, the model is employed to examine how various components of the state's agricultural sector adjust to changes in certain price and nonprice variables. Results reveal characteristics of the state's agricultural economy that are both unique and useful - characteristics that are usually masked in aggregate models but that have profound implications for modeling producer decision making and policy formulation.Industrial Organization,

Structural Adjustment And The Stability Of The Nigerian Money Demand Function

This paper uses cointegration vector error correction analysis to test the stability of the demand for real broad money (M2) in Nigeria over the quarterly period 1986:1 to 2001:4 in order to ascertain whether recent macroeconomic developments such as the implementation of the structural adjustment programme (SAP) in 1986; the liberalization of the exchange rate, domestic interest rate, and capital accounts; financial deepening and innovations; changes in monetary policy regimes; and increased integration of the economy with the rest of the world may have caused the real broad money demand function to become structurally unstable. Our empirical results indicate that there exists a long-run relationship between the real broad money aggregate, real income, inflation rate, domestic interest rate, foreign interest rate, and expected exchange rate. Furthermore, both the CUSUM and CUSUMSQ tests confirm the stability of the short- and long run parameters of the real money demand function. The stability of the parameters of the money demand equation provides the justification for the monetary authority to target the broad money supply in its bid to manage inflation and stimulate economic activity in Nigeria

Tourism Development and Air Pollution in Caribbean SIDs: A Bootstrap Panel Granger Causality Analysis

This paper investigates the possibility of Granger causality between tourism development and air pollution in twelve Caribbean small island developing states (SIDs) over the period 1995-2017 in a panel-based model that both allows for the assessment of causality in countries with cross-sectional dependency and heterogeneity and avoids the problem of incorrect specification associated with conventional panel unit root and cointegration tests. The empirical results indicate bidirectional causality between tourism and air pollution for Barbados, Dominican Republic, Jamaica, St. Lucia, and Trinidad and Tobago; unidirectional causality running from tourism to air pollution in Antigua and Barbuda, Cuba, and Guyana; reverse causality from air pollution to tourism in The Bahamas, British Virgin Islands and Haiti, while no causality is found for St. Kitts and Nevis. Our empirical findings provide important policy implications for the Caribbean countries being studied

Structural Vector Auto Regression Analysis of the Dynamic Effects of Shocks in Renewable Electricity Generation on Economic Output and Carbon Dioxide Emissions: China, India and Japan

This paper investigates effects of shocks in the share of renewable electricity in total electricity generation on real output growth and CO2 emissions in China, Japan and India from 1970 to 2011 using Structural Vector AutoRegression analysis. These economies are assumed to face exogenous correlated random shocks in the share of renewable electricity in total electricity generation (RT). The substantiality of the shocks' impact on real output growth and CO2 emissions were examined using impulse responses and variance decompositions. The impulse responses show that positive shock in RT positively affects real output growth and reduces CO2 emissions. Shocks in RT have long-lived impacts, but all countries show stability signs and absorb RT shocks with some delays. Variance decompositions analysis corroborates the findings of impulse responses. These research findings support governmental initiatives that reduce CO2 emissions through renewable power generation and ensure sustained economic growth. Keywords: Renewable Electricity; CO2 Emissions; Economic Growth JEL Classification: 013; Q5; Q42; Q43; Q5

Exchange rate volatility and export growth in Nigeria

This article examines the impact of exchange rate volatility on Nigeria's exports to its most important trading-partner-the United States over the quarterly period January 1980 to April 2001. Using cointegration and vector error correction (VECM) framework, empirical tests indicate the presence of a unique cointegrating vector linking real exports, real foreign income, relative export prices and real exchange rate volatility in the long run. Furthermore, the results show that increases in the volatility of the real exchange rate raise uncertainty about profits to be made which exert significant negative effects on exports both in the short- and long-run. Our results also show that improvements in the terms of trade (represented by declines in the real exchange rate) and real foreign income exert positive effects on export activity. Most importantly, we found that the trade liberalization and economic reform policies implemented in the post-1986 structural adjustment period contributed to Nigeria's export performance. Overall, our findings suggest that Nigeria's exporting activities can be further boosted by policies aimed at achieving and maintaining a stable competitive real exchange rate.

The Relationship between Tax Revenues and Government Expenditures in European Union and Non-European Union OECD Countries

This article examines the causal relationship between tax revenues and government expenditures in twenty-two OECD countries, eleven European Union (EU) member states, and eleven non-EU. We use the Autorgressive Distributed Lag (ARDL) bounds test and the Toda-Yamamoto Granger noncausality approach to test for causality. The results show that the long-run and short-run causal patterns differ across these groups within the Organisation for Economic Co-operation and Development (OECD). For the long-run causal patterns, we find evidence to confirm the tax-and-spend hypothesis in eight of the twenty-two countries; but the evidence is more prevalent within the EU countries, where tax burdens are much higher, than in the non-EU OECD countries. In addition, the long-run causality results also confirm the institutional separation hypothesis in twelve countries, with two-thirds coming from the non-EU OECD countries. While we have no evidence to support the fiscal synchronization hypothesis in the long run, the short-run results show evidence of fiscal synchronization in five out of twenty-two countries.EU; OECD; tax revenues; government expenditures; causality; ARDL bounds test