Economies

24 pages, 763 KiB

Open AccessArticle

Market Reactions to U.S. Financial Indices: A Comparison of the GFC versus the COVID-19 Pandemic Crisis

by Dante Iván Agatón Lombera, Diego Andrés Cardoso López, Jesús Antonio López Cabrera and José Antonio Nuñez Mora

Economies 2024, 12(7), 165; https://doi.org/10.3390/economies12070165 - 27 Jun 2024

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Abstract

This study delves into the impacts of the 2008 global financial crisis (GFC) and the COVID-19 health crisis on U.S. financial indices, exploring the intricate relationship between economic shocks and these indices during downturns. Using Markov switching regression models and control variables, including [...] Read more.

This study delves into the impacts of the 2008 global financial crisis (GFC) and the COVID-19 health crisis on U.S. financial indices, exploring the intricate relationship between economic shocks and these indices during downturns. Using Markov switching regression models and control variables, including GDP, consumer sentiment, industrial production, and the ratio of inventories-to-sale, it quantifies the effects of these crises on the CBOE Volatility Index (VIX), Standard & Poor’s 500 (S&P 500), and the Dow Jones Industrial Average (DJIA) from Q1 2000 to Q2 2023, covering crucial moments of both crises and stable periods (dichotomous variables). Results reveal that the 2008 crisis significantly heightened financial volatility and depreciated the valuation of S&P 500 and DJIA indicators, while the COVID-19 crisis had a diverse impact on market dynamics, particularly negatively affecting specific sectors. This study underscores the importance of consumer confidence and inventory management in mitigating financial volatility and emphasises the need for robust policy measures to address economic shocks, enhance financial stability, and alleviate future crises, especially during endogenous crises such as financial downturns. This research sheds light on the nuanced impact of crises on financial markets and the broader economy, revealing the intricate dynamics shaping market behaviour during turbulent times. Full article

(This article belongs to the Special Issue Financial Market Volatility under Uncertainty)

19 pages, 3671 KiB

Open AccessArticle

A Self-Adaptive Centrality Measure for Asset Correlation Networks

by Paolo Bartesaghi, Gian Paolo Clemente and Rosanna Grassi

Economies 2024, 12(7), 164; https://doi.org/10.3390/economies12070164 - 27 Jun 2024

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Abstract

We propose a new centrality measure based on a self-adaptive epidemic model characterized by an endogenous reinforcement mechanism in the transmission of information between nodes. We provide a strategy to assign to nodes a centrality score that depends, in an eigenvector centrality scheme, [...] Read more.

We propose a new centrality measure based on a self-adaptive epidemic model characterized by an endogenous reinforcement mechanism in the transmission of information between nodes. We provide a strategy to assign to nodes a centrality score that depends, in an eigenvector centrality scheme, on that of all the elements of the network, nodes and edges, connected to it. We parameterize this score as a function of a reinforcement factor, which for the first time implements the intensity of the interaction between the network of nodes and that of the edges. In this proposal, a local centrality measure representing the steady state of a diffusion process incorporates the global information encoded in the whole network. This measure proves effective in identifying the most influential nodes in the propagation of rumors/shocks/behaviors in a social network. In the context of financial networks, it allows us to highlight strategic assets on correlation networks. The dependence on a coupling factor between graph and line graph also enables the different asset responses in terms of ranking, especially on scale-free networks obtained as minimum spanning trees from correlation networks. Full article

(This article belongs to the Special Issue Complex Networks on Macroeconomics and Finance: Models, Methods, Applications)

28 pages, 2772 KiB

Open AccessArticle

Brake Segment for Agglomeration Policy: Engineers as Human Capital

by Akifumi Kuchiki

Economies 2024, 12(7), 163; https://doi.org/10.3390/economies12070163 - 27 Jun 2024

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Abstract

A “segment” is a component of the organization of an agglomeration. The organization of agglomeration is formed by the construction of segments. Manufacturing agglomeration segments can be divided into four main categories: human resources including engineers, physical infrastructure, institutions, and living environment. Each [...] Read more.

A “segment” is a component of the organization of an agglomeration. The organization of agglomeration is formed by the construction of segments. Manufacturing agglomeration segments can be divided into four main categories: human resources including engineers, physical infrastructure, institutions, and living environment. Each segment then has a specific function in the process of building industrial agglomeration. We focus on the process of building segments in agglomeration formation. We define a “brake segment” as a segment that has a “function” to decelerate the speed of the process. The purpose of this paper is to identify the existence of this brake segment in the process of constructing the segments of the manufacturing agglomeration. We obtained the following three results. First, a modified version of the spatial economic model yields that the number of agglomerated firms is inversely related to the wages of skilled workers. Second, a factor analysis of the data on investment environment costs indicates that in the case of the manufacturing industry, the number of agglomerated firms are inversely related to the wages of engineers. Third, the factor analysis of the six countries in the JBIC survey reveals that the segment that poses the investment issue in foreign direct investment in India is engineers as human capital. We conclude that engineers as human capital are a brake segment. The implication is that the sustained development of “engineers” as human capital is essential for the success of manufacturing industry agglomeration. Full article

(This article belongs to the Special Issue Industrial Clusters, Agglomeration and Economic Development)

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32 pages, 630 KiB

Open AccessArticle

Can Remittance Promote Tourism Income and Inclusive Gender Employment? Function of Migration in the South African Economy

by Sandra Makwembere, Paul Acha-Anyi, Abiola John Asaleye and Rufaro Garidzirai

Economies 2024, 12(7), 162; https://doi.org/10.3390/economies12070162 - 26 Jun 2024

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Abstract

With globalisation and international trade, remittances and migration significantly influence economic activities, yet their impact on tourism income and gender-specific employment remains under-researched. This study uses autoregressive distributed lags and Granger causality to examine the effects of remittances and migration on tourism income [...] Read more.

With globalisation and international trade, remittances and migration significantly influence economic activities, yet their impact on tourism income and gender-specific employment remains under-researched. This study uses autoregressive distributed lags and Granger causality to examine the effects of remittances and migration on tourism income and employment in South Africa. Three models are established as follows: for aggregate employment, male employment, and female employment, each with equations for tourism income and employment. Key findings from this study indicate that remittances significantly drive tourism income in both the short and long run across all models. Conversely, employment negatively impacts tourism income, hinting at sectoral trade-offs. Migration positively affects tourism income in the short run for male and aggregate models but is insignificant for female employment. Remittances boost male employment in both the short and long run, whereas their impact on female employment is significant only in the long run. Causality analysis shows a bidirectional relationship among employment indicators, with unidirectional causality from remittances to migration and from migration to income. This study recommends policies to support remittance inflows and their productive use in tourism, along with targeted interventions to reduce gender disparities in employment and promote equitable economic opportunities. Full article

(This article belongs to the Special Issue Economics of Migration)

13 pages, 879 KiB

Open AccessArticle

Debt Puzzle: A Comparative Analysis of Public Debt’s Impact on Production Efficiency across OECD Countries

by Usama R. Al-qalawi and Arqam Al-Rabbaie

Economies 2024, 12(7), 161; https://doi.org/10.3390/economies12070161 - 26 Jun 2024

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Abstract

Debt is a fundamental component of modern economic systems. It serves as a source of financing for government, business, and individual projects. Many earlier studies concentrated on the direct relationship between debt and economic performance using different econometric methodologies. This work investigates the [...] Read more.

Debt is a fundamental component of modern economic systems. It serves as a source of financing for government, business, and individual projects. Many earlier studies concentrated on the direct relationship between debt and economic performance using different econometric methodologies. This work investigates the effect of debt on production efficiency, extracted from the estimated production function. Unlike previous econometric approaches, we employ a production stochastic frontier analysis (SFA) on data for 18 OECD countries spanning from Quarter 1, 2015, to Quarter 3, 2021, to capture the short-run effect of debt on the production efficiency and, thus, output growth. The results show that, in the short run, as debt increases by $1 billion, efficiency increases by 0.04%. Additionally, we found that the most indebted countries are the most efficient countries. In our sample, those were the UK and France. Furthermore, the average efficiency for the 18 OECD countries was 70.07. Full article

(This article belongs to the Special Issue Dynamic Macroeconomics: Methods, Models and Analysis)

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16 pages, 364 KiB

Open AccessArticle

Data Envelopment Analysis-Based Approach to Improving of the Budget Allocation System for Decarbonization Targets

by Svetlana V. Ratner, Andrey V. Lychev and Vladimir E. Krivonozhko

Economies 2024, 12(7), 160; https://doi.org/10.3390/economies12070160 - 25 Jun 2024

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Abstract

Energy innovation plays an important role in the transition to a zero-carbon economy. Governments in IEA member countries are investing in the R&D, demonstration, and deployment of new energy technologies as part of their energy and climate policies. However, government subsidies for energy [...] Read more.

Energy innovation plays an important role in the transition to a zero-carbon economy. Governments in IEA member countries are investing in the R&D, demonstration, and deployment of new energy technologies as part of their energy and climate policies. However, government subsidies for energy innovation are not always efficient in achieving climate policy goals. This paper proposes a two-stage Data Envelopment Analysis model with shared inputs to determine the optimal allocation of public funds for the energy innovation process. The innovation process is divided into two stages: the R&D stage and the commercialization stage. The inputs to the model (budget expenditures for energy innovations) are distributed between the first and second stages. As intermediate products, we use the number of patents in clean energy and hydrocarbon energy. The outputs of the model are the changes in carbon intensity and energy efficiency. This model can be used to assess the effectiveness of government spending on energy innovation. The results show that some IEA member countries should allocate a large part of the fossil fuel technology budget (more than 70%) to the research and development phase. The proposed model can support decision making at the international level to increase the effectiveness of public policies in achieving decarbonization and energy efficiency goals. Full article

(This article belongs to the Topic Energy Economics and Sustainable Development)

25 pages, 658 KiB

Open AccessArticle

Impact of Firm-Specific and Macroeconomic Determinants on Environmental Expenditures: Empirical Evidence from Manufacturing Firms

by Salim Bagadeem, Ayesha Siddiqui, Sapna Arora Narula, Najib H. S. Farhan and Muneer Ahmad Magry

Economies 2024, 12(7), 159; https://doi.org/10.3390/economies12070159 - 25 Jun 2024

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Abstract

This research aims to examine the association between firm-specific and macroeconomic determinants and environmental expenditures in the Indian manufacturing sector. Furthermore, it seeks to investigate the moderation effect of country-level governance and economic development on the association between macroeconomic, firm-specific, and environmental expenditures. [...] Read more.

This research aims to examine the association between firm-specific and macroeconomic determinants and environmental expenditures in the Indian manufacturing sector. Furthermore, it seeks to investigate the moderation effect of country-level governance and economic development on the association between macroeconomic, firm-specific, and environmental expenditures. The current study is based on 70 manufacturing firms for the period of 2011 to 2021. The dependent variable is environmental expenditures and the independent variables are firm-specific and microeconomic determinants. The results revealed that market capitalization and firm size have a positive and significant impact on environmental expenditures. On the other hand, inflation and the rule of law negatively and significantly affect environmental expenditures. Regarding the moderation effect, the results revealed that the rule of law and GDP positively moderate the association between inflation and environmental expenditures. Hence, this research has significant implications for corporate executives, financial experts, regulators, and other interested parties. Full article

(This article belongs to the Section Growth, and Natural Resources (Environment + Agriculture))

18 pages, 2677 KiB

Open AccessArticle

Mapping EU Member States’ Quality of Life during COVID-19 Pandemic Crisis

by Zacharias Dermatis, Charalampos Kalligosfyris, Eleni Kalamara and Athanasios Anastasiou

Economies 2024, 12(7), 158; https://doi.org/10.3390/economies12070158 - 24 Jun 2024

Viewed by 331

Abstract

This study proposes an integrated methodology for the assessment and mapping of quality of life (QoL) among European Union member states in the period before and after the pandemic crisis of COVID-19. The assessment of quality of life was based on the development [...] Read more.

This study proposes an integrated methodology for the assessment and mapping of quality of life (QoL) among European Union member states in the period before and after the pandemic crisis of COVID-19. The assessment of quality of life was based on the development of composite criteria and Geographical Information Systems or GIS technology, using variables that assess quality of life. The composite criteria relate to the socioeconomic environment, employment conditions, economic conditions and health services. Each criterion was evaluated by a set of variables, and each variable was weighted based on relevant research by Greek experts. Criteria were also weighted and combined to assess overall quality of life. The methodology was applied in 27 EU member countries, and mapping led to the identification of countries with low and high quality of life. The results showed a change in the level of overall quality of life in the EU countries before and after the pandemic period, although on a limited scale, since there is a slight reclassification of the countries’ positions. The analysis also revealed the highest level of quality of life in four EU countries [Sweden, Denmark, the Netherlands and Luxembourg] that show an increased GDP per capita, combining a low level of arrears and a low level of inability to make ends meet, whereas four countries showed the lowest level of quality of life [Greece, Bulgaria, Romania and Croatia] in both periods. Full article

(This article belongs to the Special Issue Economics after the COVID-19)

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29 pages, 6831 KiB

Open AccessArticle

The Tale of Two Economies: Inflationary Dynamics in the Euro Area and the US in the Context of Uncertainty

by Stefan Collignon

Economies 2024, 12(7), 157; https://doi.org/10.3390/economies12070157 - 21 Jun 2024

Viewed by 261

Abstract

In recent years, the global economy has been hit by a sequence of severe shocks that affected the two largest economies, the USA and the Euro Area, severely. Uncertainties about the future abound. While the challenges are similar for both economies and the [...] Read more.

In recent years, the global economy has been hit by a sequence of severe shocks that affected the two largest economies, the USA and the Euro Area, severely. Uncertainties about the future abound. While the challenges are similar for both economies and the policy tools resemble each other, they apply to different economic landscapes. What can they learn from each other? This paper looks at the basic structural facts, the nature of uncertainty shocks, and the efficiency of policy tools in the two economies. The key to understanding recent developments is uncertainty. This paper argues that the channel through which uncertainty influences inflation, wage cost, and unemployment is the markup firms charge to cover their cost of capital. While the measurements of uncertainty are uncertain, adding a proxy for uncertainty can improve the estimates of the basic New Keynesian model. The Federal Reserve Bank has been more successful because it operates in a more integrated capital market. In the Euro Area, uncertainty is higher than in the US and this could make disinflation in Europe more painful in terms of unemployment. Full article

(This article belongs to the Special Issue The Political Economy of Money)

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Economies, Volume 12, Issue 7 (July 2024) – 9 articles

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