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Applied Economic Analysis
Number of Followers: 1  
 
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ISSN (Online) 2632-7627
Published by Emerald Homepage  [361 journals]
  • An investigation of demand and exchange rate shocks in the tourism sector
         This is an Open Access Article Open Access Article

    • Authors: Kurtulus Bozkurt, Hatice Armutçuoğlu Tekin, Zeliha Can Ergün
      Abstract: This study aims to measure the relationship between demand and exchange rate shocks in the tourism industry. A panel data set is constructed covering the period between 1995 and 2017, and the data set includes the top 26 countries that host 10 million tourists and above in the world as of 2017. The standard errors of the series are used as an indicator of shocks. First, the cross-sectional dependency, stationarity and the homogeneity of the series are examined; second, a panel cointegration analysis is implemented; third, long-term panel cointegration coefficients are analyzed with Dynamic Common Correlated Effects (DCCE) approach; and, finally, Dumitrescu and Hurlin’s (2012) Granger non-causality test is used to detect the causality. The preliminary analyses show that the variables are cross-sectional dependent and heterogeneous and are stationary in their first difference; hence, the effects of the shocks are temporary. On the other hand, as a result of the panel cointegration analysis, it is found that both series are cointegrated over the long-term. However, the long-term coefficients estimated with the DCCE approach are found not to be statistically significant. Finally, as a result of the Dumitrescu and Hurlin’s (2012) Granger non-causality test, it is concluded that there is a causality running from exchange rate shocks to demand shocks. To the best of the authors’ knowledge, the cointegration between the tourism demand shocks and exchange rates shocks has not been investigated before, and therefore, this study is considered to be a pioneering study that will contribute to the literature.
      Citation: Applied Economic Analysis
      PubDate: 2021-04-09
      DOI: 10.1108/AEA-05-2020-0051
      Issue No: Vol. 28, No. 84 (2021)
       
  • Does a Clarke-Groves type tax prevent free riding when implementing
           Eurobonds'

         This is an Open Access Article Open Access Article

    • Authors: Carlos Contreras, Julio Angulo
      Abstract: The purpose of this paper is to propose a Clarke-Groves Tax (CGT) type as a remedy to the criticism that the implementation of Eurobonds has raised regarding the risk of undermining fiscal discipline. In this model, a government minimizes its sovereign debt-to-GDP ratio in a given period and decides whether to join a common sovereign debt club. In doing so, it exposes itself to a positive or negative tax burden while benefiting from the liquidity premium involved in creating a secure asset. The authors found that the introduction of this tax may prevent free riding behaviours if Eurobonds were to be implemented. To illustrate this, the authors provide some numerical simulations for the Eurozone. In the model presented, a government which optimizes a social utility function decides whether to join the common debt club. The adoption of the proposed tax could prevent free-riding behaviours and, therefore, encourages participation by those countries with lower debt levels that would have not otherwise taken part in this common debt mechanism. Under certain circumstances, we can expect the utility of all members of this club to improve. The bias in the distribution of gains might be mitigated by regulating the tax rule determining the magnitude of payment/reward. The proportion of the liquidity premium, arising from the implementation of a sovereign safe asset, has a decisive impact on the degree of the governments’ utility enhancement. The adoption of a CGT would require Eurobonds club members to reach an agreement on “the” theoretical model for determining the sovereign debt yield. One of the limitations of this model is considering the debt-to-GDP ratio as the sole determinant of public debt yields. Moreover, the authors assumed the relationship between the debt-to-GDP ratio and funding costs to be identical for all countries. Any progress in the implementation of the proposed transfer scheme would require a more realistic and in-depth analysis. A new fiscal rule based on compensating countries with lower public debt levels could be a way to mitigate free-riding problems if a Eurobond mechanism is to be established. This fiscal rule has not been proposed or analysed before in a context such as that considered by this paper.
      Citation: Applied Economic Analysis
      PubDate: 2021-04-05
      DOI: 10.1108/AEA-03-2020-0020
      Issue No: Vol. 28, No. 84 (2021)
       
  • The economic consequences of Covid in Spain and how to deal with them
         This is an Open Access Article Open Access Article

    • Authors: Angel de la Fuente
      Abstract: This paper aims to review the economic impact of Covid in Spain and propose policies to deal with them. Not relevant. The pandemic is having a very severe effect, which varies across sectors and regions. Given the severity of the problem, a comprehensive policy strategy is needed. Specific proposals about such a strategy are made, distinguishing between the short and the long run. You tell me.
      Citation: Applied Economic Analysis
      PubDate: 2021-03-04
      DOI: 10.1108/AEA-11-2020-0158
      Issue No: Vol. 28, No. 84 (2021)
       
  • Spanish non-financial corporations and the COVID pandemic: vulnerability,
           resilience and transformation

         This is an Open Access Article Open Access Article

    • Authors: Vicente Salas-Fumás
      Abstract: This paper aims to assess the vulnerability and resilience of the Spanish non-financial corporations (NFC) to the shock from the COVID pandemic with consolidated income accounts data, and shows comparative labor productivity and endowment of organizational capital of Spanish firms, as indicators of their capabilities at the outset of the new digital transformation wave proposed by the next generation EU program. The paper first describes the recent evolution (quarterly 2020 data) of the Spanish non-financial corporate sector (gross value added, labor cost, capital formation, profits) in the assessment of the vulnerability and resilience of the sector to the shock of the COVID pandemic. Then second, it estimates a probit model to evaluate the EU country effects in the explanation of the different propensity firms in the European Company Survey database to adopt innovative management and organization practices. In the Spring of 2020, the Spanish NFC were still recovering from the great recession (low resilience), and the severe contraction in value-added and profits of the corporate sector in the first three quarters of the year evidences its high vulnerability. The proved complementarity between organizational and information related assets implies that the low endowment of organizational capital of Spanish firms, could be a severe limitation for the advancement toward digitalization. The aggregate corporate sector data used in the analysis of vulnerability and resilience of Spanish firms does not account for the heterogeneous effects of the pandemic across economic sectors (manufacturing and services, for example) and across firms (large versus small ones). The paper complements the country-level analysis of the impact of the COVID pandemic in the Spanish economy with the analysis of the impact of the pandemic in the performance of the corporate sector. It provides one of the first analysis of the current endowment of organization capital of Spanish firms and highlights its relevance for productivity growth.
      Citation: Applied Economic Analysis
      PubDate: 2021-02-24
      DOI: 10.1108/AEA-11-2020-0157
      Issue No: Vol. 28, No. 84 (2021)
       
  • The costs of COVID-19 and the cost-effectiveness of testing
         This is an Open Access Article Open Access Article

    • Authors: Beatriz González López-Valcárcel, Laura Vallejo-Torres
      Abstract: This paper aims to provide an estimation of the costs of the coronavirus (COVID-19) pandemic with a special focus on Spain. Costs include macroeconomic costs of foregone gross domestic product (GDP) attributable to the pandemic and the direct and indirect costs of prevention, treatment and lost productivity. This study also analyzes the cost-effectiveness of the test-tracking-quarantine (TTQ) strategy in Spain. The macroeconomic costs of foregone GDP attributable to the pandemic are estimated for different countries and areas by comparing the present GDP forecasts for 2020 and 2021 with counterfactuals estimated before the COVID-19 crisis aftermath. The total cost of the COVID-19 for Spain in 2020 was obtained using the cost of illness approach with a bottom-up process. A cost-effectiveness analysis of the TTQ strategy in Spain is based on the estimation of the total costs of TTQ and the health gains and avoided health-care costs associated with the TTQ strategy. A sensitivity analysis explores the consequences of uncertainty in key parameters. The GDP cost of the COVID-19 is by far larger than all the other components of the cost. The global cost of the Covid-19 crisis in 2020–2021 is estimated at 14% of 2019 GDP (around 12,206 mm$). In the specific case of Spain, it amounts to 24% of the 2019 GDP; which is 397.3 m €. Spain is and will be by far the European country most economically affected by the pandemic. In Spain 2020, the GDP cost accounts for 94.7% of the total cost of the COVID-19 and health-care direct costs are only 2.14%. TTQ is a dominant strategy in Spain. For each euro spent on it, 7 euros will be recovered only in terms of saved health-care resources. Given the large degree of uncertainty and the fast-evolving nature of the epidemic, a number of assumptions are required to arrive at the estimates provided in this study. The results were found to be robust to the assumptions applied. TTQ is a key strategy for the contention of the epidemy and it is justified from the economic perspective. This is the first estimation of the cost of the COVID-19 and the cost-effectiveness of the TTQ strategy for Spain.
      Citation: Applied Economic Analysis
      PubDate: 2021-02-22
      DOI: 10.1108/AEA-11-2020-0162
      Issue No: Vol. 28, No. 84 (2021)
       
  • Impact of COVID-19 on the trade of goods and services in Spain
         This is an Open Access Article Open Access Article

    • Authors: Asier Minondo
      Abstract: This paper aims to analyze the impact of COVID-19 on the trade of goods and services in Spain. This paper uses monthly trade data at the product, region and firm level. The COVID-19 crisis has led to the sharpest collapse in the Spanish trade of goods and services in recent decades. The containment measures adopted to arrest the spread of the virus have caused an especially intense fall of trade in services. The large share of transport equipment, capital goods, products that are consumed outdoors (i.e., outdoor goods) and tourism in Spanish exports has made the COVID-19 trade crisis more intense in Spain than in the rest of the European Union. The nature of the collapse suggests that trade in goods can recover swiftly when the health crisis ends. However, COVID-19 may have a long-term negative impact on the trade of services that rely on the movement of people. It contributes to understand how COVID-19 has affected the trade in goods and services in Spain.
      Citation: Applied Economic Analysis
      PubDate: 2021-02-03
      DOI: 10.1108/AEA-11-2020-0156
      Issue No: Vol. 28, No. 84 (2021)
       
  • Assessing the impacts of global economic policy uncertainty and the
           long-term bond yields on oil prices

         This is an Open Access Article Open Access Article

    • Authors: Oguzhan Ozcelebi
      Abstract: Might the impact of the global economic policy uncertainty (GEPU) and the long-term bond yields on oil prices be asymmetric' This paper aims to consider the effects of the GEPU and the US long-term government bond yields on oil prices using quantile-based analysis and nonlinear vector autoregression (VAR) model. The author hypothesized whether the negative and positive changes in the GEPU and the long-term bond yields of the USA have different effects on oil prices. To address this question, the author uses quantile cointegration model and the impulse response functions (IRFs) of the censored variable approach of Kilian and Vigfusson (2011). The quantile cointegration test showed the existence of non-linear cointegration relationship, whereas Granger-causality analysis revealed that positive/negative variations in GEPU will have opposite effects on oil prices. This result was supported by the quantile regression model’s coefficients and nonlinear VAR model’s IRFs; more specifically, it was stressed that increasing/decreasing GEPU will deaccelerate/accelerate global economic activity and thus lead to a fall/rise in oil prices. On the other hand, the empirical models indicated that the impact of US 10-year government bond yields on oil prices is asymmetrical, while it was found that deterioration in the borrowing conditions in the USA may have an impact on oil prices by slowing down the global economic activity. As a robustness check of the quantile-based analysis results, the slope-based Mork test is used.
      Citation: Applied Economic Analysis
      PubDate: 2021-01-29
      DOI: 10.1108/AEA-05-2020-0046
      Issue No: Vol. 28, No. 84 (2021)
       
  • The stabilizing effects of economic policies in Spain in times of COVID-19
         This is an Open Access Article Open Access Article

    • Authors: J.E. Boscá, R. Doménech, J. Ferri, J.R. García, C. Ulloa
      Abstract: This paper aims to analyse the stabilizing macroeconomic effects of economic policies during the COVID-19 crisis in Spain. The contribution of the structural shocks that explain the behaviour of the main macroeconomic aggregates during 2020 are estimated, and the effects of economic policies are simulated using a dynamic stochastic general equilibrium (DSGE) model estimated for the Spanish economy. The results highlight the importance of supply and demand shocks in explaining the COVID-19 crisis. The annual fall in gross domestic product (GDP) moderates at least by 7.6 points in the most intense period of the crisis, thanks to these stabilizing policies. Finally, the potential effects of Next Generation EU in the Spanish economy are estimated. Assuming that Spain may receive from the EU between 1.5 and 2.25 percentage points (pp) of GDP, activity could increase to between 2 and 3 pp in 2024. To the best of the authors’ knowledge, the exercises and findings are original. All these results show the usefulness of a DSGE model, such as the estimated rational expectation model for Spain, as a practical tool for the applied economic analysis, the macroeconomic assessment of economic policies and the understanding of the Spanish economy.
      Citation: Applied Economic Analysis
      PubDate: 2021-01-18
      DOI: 10.1108/AEA-11-2020-0165
      Issue No: Vol. 28, No. 84 (2021)
       
  • Past, present and future of the Spanish labour market: when the pandemic
           meets the megatrends

         This is an Open Access Article Open Access Article

    • Authors: Juan J. Dolado, Florentino Felgueroso, Juan F. Jimeno
      Abstract: This paper aims to review the experience so far of the Spanish labour market during the Covid-19 crisis in the light of the existing institutions, its performance during past recessions and the policy measures adopted during the pandemic. Emphasis is placed on the role of worldwide trends in labour markets because of automation and artificial intelligence, in shaping a potential recovery of this (hopefully) transitory shock through a big reallocation process of employment and economic activity. It also highlights some innovations to employment and social policies needed to smooth the reallocation process and lessen the rise in inequality associated to technological trends. Theory and empirics. The Spanish labour market will subject to a great reallocation shock as a result of Covid-19 and secular technological changes. Reforms need to be undertaken. An overview and some new results.
      Citation: Applied Economic Analysis
      PubDate: 2021-01-05
      DOI: 10.1108/AEA-11-2020-0154
      Issue No: Vol. 28, No. 84 (2021)
       
  • Effect of volatility of foreign direct investment inflows on corporate
           income tax revenue volatility

         This is an Open Access Article Open Access Article

    • Authors: Sena Kimm Gnangnon
      Abstract: This paper aims to examine how the volatility of foreign direct investment (FDI) inflows affects the volatility of corporate income tax revenue. The study has used an unbalanced panel data set of 129 countries over the period 1981–2016 and the two-step system generalized methods of moment approach to perform the empirical analysis. The main findings are that FDI volatility enhances the volatility of corporate income tax revenue in less advanced economies, but reduces it in relatively advanced countries. The positive corporate income tax revenue volatility effect of FDI inflows is far higher in non-tax haven countries than in tax haven countries. Additionally, FDI volatility exerts a higher positive effect on corporate income tax revenue volatility as countries experience greater dependence on natural resources. Finally, the positive effect of FDI volatility on corporate income tax revenue volatility is further amplified by higher FDI volatility. One important limitation of the present analysis is the use of aggregate FDI inflows because of the lack of data over a long period on greenfield FDI inflows and cross-border mergers and acquisitions FDI inflows. Therefore, an avenue for future research could be to explore separately the effect of the volatility greenfield FDI inflows and the volatility of cross-border mergers and acquisitions FDI inflows on the volatility of corporate income tax revenue, when long-time series data (covering many countries) would be available. These outcomes particularly shed light on the role of FDI volatility on the volatility of corporate income tax revenue, particularly in countries that are highly dependent on natural resources. Foreign capital flows, notably FDI flows, play an essential role for countries’ economic development through, inter alia, technology transfer, jobs creation and economic growth. Policymakers should aim to attract FDI, while also reducing their volatility, by designing and implementing policies and measures (such as those in favor of business environment improvement, property rights enforcement and political stability) that would assure foreign investors of the continuous high returns of their investments. To the best of the author’s knowledge, this is the first time this topic is being addressed empirically in the literature.
      Citation: Applied Economic Analysis
      PubDate: 2020-11-26
      DOI: 10.1108/AEA-04-2020-0030
      Issue No: Vol. 28, No. 84 (2020)
       
  • Growth and business cycle in Argentina. A long-run approach,
           1870–2015

         This is an Open Access Article Open Access Article

    • Authors: María Dolores Gadea, Isabel Sanz-Villarroya
      Abstract: The purpose of this study is to focus deeply on the short term to explain the relative long-term evolution of the Argentinian economy in the long and the short term. The study of the long-term evolution of the Argentine economy and identifying the moment in which it began to lose ground compared to other developed economies, such as Australia and Canada, constitutes the central axis of the historiography of this country. However, an additional problem presented by the Argentine economy is its high volatility. For this reason, the long term should be influenced by the short term, an issue that requires a more detailed study of the cyclical behavior and a deep analysis of the relationship between the long and the short term. The results obtained point to a cyclical development that influences the long-term evolution and, therefore, explains Argentina’s convergence process with Australia and Canada. Frequent deep busts and short booms characterize the Argentine cycle, offsetting its long-term growth potential. Although the long term has been profusely studied in Argentina, the short term has not been analyzed to the same extent, which is surprising given the extreme volatility of this economy (Prebisch, 1950). The studies performed on economic cycles have always been partial, disconnected from the long term and carried out without much technical rigor.
      Citation: Applied Economic Analysis
      PubDate: 2020-11-23
      DOI: 10.1108/AEA-03-2020-0024
      Issue No: Vol. 28, No. 84 (2020)
       
  • The intergenerational effect of parental enthusiasm for reading
         This is an Open Access Article Open Access Article

    • Authors: Jose G. Clavel, Mauro Mediavilla
      Abstract: This paper aims to focus on how reading for pleasure is transmitted within the family. Using data taken from the Programme for International Student Assessment test of 2009, which dealt in depth with the reading proficiency of students, the authors show that children of parents who read for pleasure are better readers. Within the extensive research and published results on reading performance, the authors focused on the transmission of parents’ reading attitudes to their children. In this study, the authors have opted for an approach of “difference in differences”, applied to a population that represents all 15-year-olds from five countries (Germany, Denmark, Hungary, Italy and Portugal). To support this study, the authors chose as a response variable the difference between reading performance and maths performance of each student, taking into account five plausible values for each student. The authors have several explanatory variables, among them what we call the “treatment”, which is the parents’ enthusiasm for reading. The calculated estimations clearly indicate that there is a positive effect for four out of the five countries analysed, ranging from 4 points for Italy to 6.5 points for Germany and Portugal. As for the significance of the effect, with the exception of Hungary, the result is reliable and robust. It should also be noted that the variable that indicates the existence of a reading habit by children (daily reading for pleasure) is seen as a factor that positively affects the difference between competence in reading and mathematics in four out of the five countries analysed. The results show positive effects on children whose parents read for pleasure, and this fact should be used to further encourage parents to promote their own reading time for pleasure. In view of the already quantified trend in international reports that adults are reading less, it seems crucial to involve educational authorities in reversing this phenomenon, knowing the impact that adult reading habits have on the reading competence of young people.
      Citation: Applied Economic Analysis
      PubDate: 2020-11-13
      DOI: 10.1108/AEA-12-2019-0050
      Issue No: Vol. 28, No. 84 (2020)
       
  • What do unit root tests tell us about unemployment hysteresis in
           transition economies'

         This is an Open Access Article Open Access Article

    • Authors: Ebru Çağlayan Akay, Zamira Oskonbaeva, Hoşeng Bülbül
      Abstract: This study aims to examine the hysteresis hypothesis in unemployment using monthly data from 13 countries in transition. Stationarity in the unemployment rate of selected transition economies was analyzed using four different group unit root tests, namely, linear, structural breaks, non-linear and structural breaks and non-linear. The empirical results show that the unemployment hysteresis hypothesis is valid for the majority of transition economies, including Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, the Kyrgyz Republic, Latvia, Lithuania, Poland, Romania and Slovenia. However, the results strongly reject the null hypothesis of unemployment hysteresis for the Kazakhstan and the Slovak Republics. This study revealed that, for countries in transition, advanced unit root tests exhibit greater validity when compared to standard tests
      Citation: Applied Economic Analysis
      PubDate: 2020-10-26
      DOI: 10.1108/AEA-05-2020-0048
      Issue No: Vol. 28, No. 84 (2020)
       
  • The labor share and income inequality: some empirical evidence for the
           period 1990-2015

         This is an Open Access Article Open Access Article

    • Authors: Iñaki Erauskin
      Abstract: The purpose of this paper is to analyze empirically the relationship between the labor share and income inequality, as measured by the Gini coefficient and by the income shares for different quintiles, during the period 1990–2015 for 62 developed and developing countries. This study uses panel data techniques to analyze empirically the relationship between the labor share and income inequality. This paper finds that a lower labor share is associated with a higher Gini coefficient. A lower labor share is found to be strongly associated with a smaller income share for the lowest two quintiles and larger income share for the highest quintile and weakly associated with a smaller income share for the third and fourth quintiles. Moreover, this paper finds that the lower the quintile, the stronger the impact of the labor share on the income share of the quintile. Policymakers should take into account the evolution of the labor share. Public policies that improve labor market outcomes, such as those aimed to promote participation in the labor market and strengthen the human capital of low-income groups, seem necessary to prevent the rise in economic inequalities. Moreover, as the digital transformation of society progresses, policies to promote skill deepening may have an important role in reversing excessive inequalities. How changes in the labor share are associated with changes in the Gini coefficient, and how this is driven by income shares for different quintiles, for a broad range of countries during the most recent period, has not been comprehensively studied using panel data techniques.
      Citation: Applied Economic Analysis
      PubDate: 2020-09-03
      DOI: 10.1108/AEA-04-2020-0028
      Issue No: Vol. 28, No. 84 (2020)
       
  • Economic growth or electricity, what came first in Spain after 1958'
         This is an Open Access Article Open Access Article

    • Authors: Jaime Jesús Sanaú Villarroya, Isabel Sanz-Villarroya, Luis Perez y Perez
      Abstract: With the opening up of the economy since the 1959 Economic Stabilization Plan, was it the production of electricity that drove the growth of gross domestic product (GDP) in Spain or, on the contrary, was it the growth of GDP that drove the production of electricity well into the 21st century' The purpose of this paper is to answer this question. A cointegration approach based on the studies conducted by Pesaran and Shin (1999) and Pesaran et al. (2001) is applied, as it is suitable for short data series like those used in this paper. The results of this paper allow us to conclude that electricity production boosted economic growth in Spain during the period under study, confirming the growth hypothesis. The results of this paper should be interpreted with caution, as electricity today amounts to less than a quarter of the total amount of energy used in Spain. It was not possible to incorporate other inputs to the production function (such as other energy inputs, technological or human capital), but the methodology used avoids the problems of omitted variables and of autocorrelation. The results show that a small economy with limited resources, such as the Spanish one, is more vulnerable to energy shocks than other energy-sufficient economies. As Spain is a country with high energy dependence from abroad, the government must first ensure the electricity supply. Increased availability and access to different sources of electricity will improve the outlook for the Spanish economy. Conversely, a shortage in supply of electricity will constrain the regular pace of economic growth. Spain should investigate and explore more efficient and cost-effective sources of energy, in particular the renewable energies, as traditional energy sources will be scarce before long. This paper differs from previous ones carried out for Spain in several aspects: it considers a broader period of time, from 1958 to 2015; the relationships between electricity production and GDP are analysed for the first time in a neo-classical production function where electricity, capital and employment are considered as separate factors; and a cointegration approach based on the studies conducted by Pesaran and Shin (1999) and Pesaran et al. (2001) is applied, as it is suitable for short data series like those used in this paper.
      Citation: Applied Economic Analysis
      PubDate: 2020-08-17
      DOI: 10.1108/AEA-02-2020-0013
      Issue No: Vol. 28, No. 84 (2020)
       
  • Applied Economic Analysis
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