Foreign Direct Investment and Financial Development in Guinea: Causality Analysis

This essay provides a better comprehension of the other disregarded impacts of FDI by examining first, the causality direction then the long- and short-term interaction among inward FDI and financial development in Guinea using 1990-2017 data set. The empirical assertions are grounded on the Granger causality wald test, Bounds test for co-integration, Error correction model (ECM) and the Auto regressive distributed lag (ARDL) framework. FDI per GDP net inflows and Credit to private sector are respectively adopted as FDI measure and financial advancement indicator. The following outcomes are established: first, FDI in the long term negatively influence financial advancement in Guinea at 5% magnitude. This inference indicates that 1 percent surge in FDI per GDP induces 0.389 decrease in credit to private sector. Second, FDI per GDP [L1] negatively and significantly interact with financial advancement in the short term. Suggesting that 1 percent increase in FDI in the short term engenders 0.215 decrease in credit to private sector. Third, the causality direction remains unidirectional irrespective to the number of lags. Finally, the long- and short-term coefficients tell us the same story regardless of the time effects. Overall, contrary to the common perceptions, we found strong evidence that foreign investment does not enhance financial development in Guinea. In terms of practical implications, it seems ineffective to use FDI as financial advancement instrument within the Guinean context.

THE NONLINEAR ASYMMETRIC RELATIONSHIP AMONG IMPLIED VOLATILITY INDICES OF INDIAN STOCK MARKET, GOLD, AND OIL: EVIDENCE FROM NARDL MODEL

The paper aims to examine the nonlinear asymmetric relationship among the implied volatility indices of the Indian stock market, gold, and oil for the period from 2nd March 2009 to 29th October 2021. Nonlinear Autoregressive Distributed Lag (NARDL) model results provide evidence of asymmetric nonlinear relationship among the selected variables in the short-run and the long-run. The positive and negative shocks to gold and oil implied volatility indices have a positive and significant influence on the implied volatility of the Indian stock market. The expected volatility of gold has a short-term symmetric impact on expected stock market volatility in the short run. Whereas, the implied volatility of oil has a long-run asymmetric impact on the implied volatility of the stock market. Increasing volatility in oil prices can be viewed as a signal for the starting point for the volatility of the Indian stock markets. In the long run, positive shocks to gold volatility have more impact on the expected volatility of the Indian stock market than the negative. This indicates that investors are shifting their investments from gold to stocks for higher returns when the gold prices are fluctuating.

CO2 Emissions and The Transport Sector in Malaysia

Transport is an essential infrastructure for development. With its high share of gross domestic product (GDP), it makes a significant contribution to total CO2 emissions in Malaysia. It is therefore important to pay greater attention to reducing CO2 emissions and sustainable development in this sector. Therefore, this study aims at estimating the relationship between transport CO2 emissions and its key drivers using the Autoregressive Distributed Lag (ARDL) technique. The time period covered by the study extends from 1978 to 2018. It further investigates the response of CO2 emissions to shocks in the value of other variables by employing the generalized impulse response approach. The results suggest that urbanization is the major contributor to the increase in CO2 emissions followed by the carbon intensity of energy in the long-run. Carbon intensity of energy, GDP per transport worker and urbanization contribute significantly to increases in transport CO2 emissions in the short- and long-run. Testing the Environmental Kuznets Curve (EKC) hypothesis recommends that Malaysia continue to be on track to reach the highest level of income and welfare to give pay more attention to the environment. Therefore, the country maintains its CO2 emissions level in the future because of economic development. Therefore, these findings show that energy and environmental policymakers need to pay more attention to improving energy efficiency and the use of low-carbon technologies and electrification in the transport sector and the use of high-quality public transport, particularly in urban areas, for sustainable urban development.

Stimulating Non-Energy Exports in Trinidad and Tobago: Evidence from a Small Petroleum-Exporting Economy Experiencing the Dutch Disease

The motivation for this study hinges around the fact that Trinidad and Tobago (T&T) is suffering from the Dutch disease which inadvertently hinders the growth of non-energy exports. This paper examines measures that can be adopted for a small petroleum-exporting economy to dampen the effect of Dutch disease by promoting non-energy trade. This paper is novel and contributes to the literature in using panel data for the T&T case, as it investigates the effect of a devaluation of the TT dollar in order to stimulate non-energy exports (a combination of agriculture and manufacturing trade). Note that previous studies would have examined the Marshall–Lerner condition on the aggregate trade balance which is heavily influenced by energy revenues. The panel autoregressive distributed lag (ARDL) method is used for ten of T&T’s main trading partners for the period 1991 to 2019 to establish findings. The results show that the Marshall–Lerner condition does not hold for aggregate trade in the long run, as expected. However, when non-energy trade is isolated, it is found that a devaluation of the TT dollar does have a positive impact on non-energy trade and the Marshall–Lerner condition holds. Other measures are also recommended to stimulate non-energy exports in the long run.

An Analysis on the Impact of Natural Disasters on the Economy of the Philippines

Over the past century, natural disasters have been terrorizing the economy by causing human fatalities and damaging infrastructure and production inputs. The Solow growth model suggests that natural disasters adversely affect gross domestic product (GDP) since these disrupt the production of inputs. On the contrary, the Schumpeterian growth theory provides an explanation behind the positive effect of natural disasters on economic growth. This study analyzed the relationship between natural disasters (i.e. earthquake, flood, and storm), economic activities (i.e. foreign aid and foreign direct investment) and GDP per capita income in the Philippines from 1990 to 2019. This study employed a multivariate analysis, time series regression, and autoregressive distributed lag (ARDL) approach. The results revealed a complex relationship between GDP per capita and the regressors. In the short run, the independent variables have a negative and significant relationship with the country’s per capita income. On the contrary, only FDI has a significant long-run relationship with the economy of the Philippines. The results highlight the Philippines’ need for comprehensive disaster plans and to lessen its dependence on foreign and external factors.

Effects of vaccination and non-pharmaceutical interventions and their lag times on the COVID-19 pandemic: Comparison of eight countries

Many countries implemented measures to control the COVID-19 pandemic, but the effects of these measures have varied greatly. We evaluated the effects of different policies, the prevalence of dominant variants (e.g., Delta), and vaccination on the characteristics of the COVID-19 pandemic in eight countries. We quantified the lag times of different non-pharmaceutical interventions (NPIs) and vaccination using a distributed lag non-linear model (DLNM). We also tested whether these lag times were reasonable by analyzing changes in daily cases and the effective reproductive number (Rt)over time. Our results indicated that the response to vaccination in countries with continuous vaccination programs lagged by at least 40 days, and the lag time for a response to NPIs was at least 14 days. A rebound was most likely to occur during the 40 days after the first vaccine dose. We also found that the combination of school closure, workplace closure, restrictions on mass gatherings, and stay-at-home requirements were successful in containing the pandemic. Our results thus demonstrated that vaccination was effective, although some regions were adversely affected by new variants and low vaccination coverage. Importantly, relaxation of NPIs soon after implementation of a vaccination program may lead to a rebound.

Do International Fragmentation of Production and Global Value Chains Participation Affect the Long-run Economic Growth?

This article aims to investigate whether the international fragmentation of production and the global value chains (hereafter GVCs) participation affects the economic growth for a set of 40 advanced and emerging economies. It considers four aspects related to the type of participation and position in GVCs captured by different value-added measures: (a) vertical specialisation index; (b) GVC participation index; (c) GVC position index in low-tech sectors; and (d) GVC position index in high-tech sectors. A panel autoregressive distributed lag (PARDL) model is pioneeringly employed to capture the long-term relationship between economic growth and our four measures for annual value-added data from 1995 to 2011, provided by the World Input–Output Tables (WIOT). The main long-run results indicate that (a) higher levels of international fragmentation of production and GVCs’ participation ensure higher GDP per capita growth rates; (b) the fragmentation and GVCs’ participation are more important to GDP growth than the gross exports as a percentage of GDP; (c) GVCs’ participation index, which considers both the ‘forward’ and ‘backward’ participation, is less important than the vertical specialisation, measured by the foreign intermediate imports; and (d the countries engaged in upstream positions in low-technology GVCs were positively and significantly benefitted in terms of growth. JEL Codes: F14, F43

Non-Performing Loans and Macroeconomics Factors: The Italian Case

The purpose of this work is to investigate the influence of macroeconomics determinants on non-performing loans (NPLs) in the Italian banking system over the period 2008Q3–2020Q4. We mainly contribute to the literature by being the first empirical article to study this relationship in the Italian context in the recent period, thus providing fresh evidence on the macroeconomic impact on NPLs, i.e., on the credit risk of Italian banks. By employing the Autoregressive Distributed Lag (ARDL) cointegration model, we are able to investigate the short and long-run effects of macroeconomic factors on NPLs. The empirical findings show that gross domestic product and public debt have a negative impact on NPLs. On the other hand, we find that the unemployment rate and domestic credit positively influence impaired loans. Finally, we find evidence of the “gamble for resurrection” approach, i.e., Italian banks tend to support “zombie firms”.

Influence of the global environment on capital flows in the London Office market

PurposeThe London office market is a major destination of international real estate capital and arguably the epicentre of international real estate investment over the past decade. However, the increase in global uncertainties in recent years due to socio-economic and political trends highlights the need for more insights into the behaviour of international real estate capital flows. The purpose of this study is to evaluate the influence of the global and domestic environment on international real estate investment activities within the London office market over the period 2007–2017.Design/methodology/approachThis study adopts an auto-regressive distributed lag approach using the real capital analytics (RCA) international real estate investment data. The RCA data analyses quarterly cross-border investment transactions within the central London office market for the period 2007–2017.FindingsThe study provides insights on the critical differences in the influence of the domestic and global environment on cross-border investment activities in this office market, specifically highlighting the significance of the influence of the global environment in the long run. In the short run, the influence of factors reflective of both the domestic and international environment are important indicating that international capital flows into the London office market is contextualised by the interaction of different factors.Originality/valueThe authors provide a holistic study of the influence of both the domestic and international environment on cross-border investment activities in the London office market, providing more insights on the behaviour of global real estate capital flows.