The Unassuming Economist

From a paper by Chor Foon Tang and Jiechen Wang:

“Over the last 30 years, China has experienced outstanding economic growth along with significant transformation in its financial system and institutional environment. It has also emerged as the primary destination for substantial foreign direct investment (FDI). Therefore, numerous studies have focused on the roles of FDI, financial development and institutional quality in stimulating the Chinese economy. However, existing literature primarily addresses the direct linear impact on economic growth, neglecting potential non-linear relationships and the roles of institutions and financial development in moderating the FDI–growth nexus. This study employs unit root and Johansen’s cointegration tests to examine the roles of FDI, institutional quality and financial development in explaining economic growth in China from 1985 to 2020. Our results show that FDI, institutions, financial development and growth are cointegrated, with non-linear effects of institutional quality and financial development on growth. Furthermore, the impact of FDI on growth decreases when financial development is high (0.627%–0.517%), but increases with improved institutional quality (0.921%–1.158%). Hence, continuous improvements in institutional quality and the financial system do not uniformly affect economic growth, but significantly influence the contribution of FDI to economic growth in China.”

From a paper by Patrice Ollivaud and Cyrille Schwellnus:

“Productivity growth in most advanced economies has slowed significantly over the past five decades. The negative impact on real wage growth has been amplified by declines in labour income shares, which have been particularly pronounced during the period 1983-2007. This chapter analyses labour share developments using a combination of country, industry and firm-level data. Technological change in the investment goods-producing sector and greater global value chain participation have tended to compress labour shares, but the effects have been significantly less pronounced in Japan and most European countries than in the United States. Firm-level evidence suggests that declines in labour shares reflect technological dynamism rather than anti-competitive forces. Policies that raise human capital through education and training play a crucial role to broaden the sharing of productivity gains by ensuring that workers can make the most of ongoing technological advances.”

From a paper by Theo Eicher, Reina Kawai Eskimez, and Monique Newiak:

“Crises often require economic consolidations that may unevenly affect different segments of the population. Some crisis countries enter financial arrangements with the IMF and adopt adjustment programs, and studies have associated program conditionality with negative impacts on gender inequality. Proper evaluations of the impacts of IMF-supported programs on gender inequality require, however, credible control groups that address the counterfactual: do post-crisis gender disparities evolve differently without an IMF-supported program? We examine over 150 IMF-supported programs (1994-2022) using custom-tailored control groups that match each IMF-supported program country’s gender and economic trends and find overwhelming evidence against systematic impacts of IMF-supported programs on gender equality.”

From a paper by Asiye Öznur Ümit and Sinem Eyüboğlu:

“This research examines effects of financial development, economic growth, government
expenditures, urbanization, and trade openness on income inequality in the leading emerging economies
of the G-20 (Argentina, Brazil, China, India, Indonesia, Mexico, Russia, and Turkiye) for the period from
1989 to 2021. The findings confirm the existence of a cointegration nexus among the variables over the
long-term. According to the common correlated effects mean group estimator, financial development has
negative effects on income inequality in the panel. Factors such as government expenditures and trade
openness demonstrate positive effects on income inequality. In the country-specific effects, we find that
the impact of financial development on income inequality is negative and statistically significant in
Argentina, India, and Russia. The influence of economic growth on income inequality is positive and
significant in Indonesia, Mexico, and Turkiye. Government expenditures on income inequality appear to
be positive in Argentina, Indonesia, and Mexico. Finally, trade openness demonstrates a positive and
significant effect in India, Indonesia, Mexico, and Turkiye. Among the reasons for the differences in test
results across countries are variations in their political structures, particularly the high inflation and
macroeconomic instability in Turkey, the presence of the informal economy and corruption in Brazil,
Indonesia, Turkey, and China, as well as regional inequalities. In this context, based on the overall panel
test results, it is recommended that policymakers increase financial inclusion, reduce regional disparities,
reduce corruption, increase social assistance, and balanced trade policy to enhance the impact of financial
development on income distribution”

From a paper by Bello Dalhatu:

“In an effort to provide policy recommendations for Nigeria’s transition to full-fledged inflation targeting, this study examines Ghana’s monetary policy frameworks (monetary aggregates targeting and inflation targeting) using ARDL bounds test for cointegration and Error Correction Mechanism (ECM) on annual time series data spanning 1965 to 2022 obtained from the Bank of Ghana database and the World Bank database on World Development Indicators. The results demonstrate that monetary aggregates targeting has not been successful in both the short-run and long-run periods in moderating and stabilizing inflation; however, inflation moderated under inflation targeting in both the short run and the long term. This indicates that inflation targeting proves to be a superior monetary policy framework for inflation control.”