drawbacks of using Granger causality is that it does not fully address causality from the manipulation perspective (Kwon and Bessler 2011).
Structural causality neither implies Granger causality nor is implied by Granger causality (Hoover 2008); it is also insufficient to solve the identification problem and is finally sensitive to the information problem (Kwon and Bessler 2011). Previous studies have used Granger causality to determine the direction of causation between income and pollution emissions (e.g., Perman and Stern 2003). Income is often found to be non- stationary or integrated. For there to be a causal relationship, the variables considered must be either stationary or cointegrated. There is not too much statistical evidence supporting causality in EKC-type relationships. It is not possible to use the results of the Granger causality test to determine if a long-run equilibrium between income and pollution emissions exists. Therefore, we cannot infer that changes in income lead to changes in pollution emissions (Carson 2010). Coondoo and Dinda (2002) test for Granger causality between carbon dioxide and income at the global level. First, their study reveals that for developed country groups of North America and Western Europe, carbon emissions Granger cause income. Secondly, for the country groups of Central and South America, Oceania and Japan, income Granger causes emissions. Finally, for country groups in Asia and Africa the causality is bi-directional. Income and emission growth rates reinforce each other. As mentioned earlier, no conclusions can be reached about the long-run relationshipbetween income and emissions.
homogenous. He and Richard (2010) identified this factor as a major cause of discrepancy in the observed relationshipbetween studies. This trend has been criticised for many reasons. Dijkgraaf and Vollebergh (2005) investigated the assumption of heterogeneity among 24 OECD countries with datasets spanning from 1960 to 1997. They reject the homogeneity assumption across countries and challenge the ‘poolability’ of cross-country panel data into an EKC analysis. Attempts to relax this restriction by using random coefficient models where done by List and Gallet (1999) Koop and Tole (1999) and Halkos (2003), they all concluded that different countries appear to have different turning points and that the ‘one-form-fits-all’ EKC curves obtained with standard panel data techniques should be used with caution. More emphatically, Fodha and Zaghdoud (2010) caution that EKC results from panel data analysis are unrealistic and dangerous.
This dissertation examines the determinants of local economic and political development in India. In the first chapter, I study the impact that agricultural income shocks have on the local nonfarm economy. I find that positive rainfall shocks induce significant employment growth, not in the rural areas where agricultural production takes place but in the nearby towns. Manufacturing firms in particular respond to changes in agricultural production. Further investigation suggests that the most likely mechanism is a capital channel by which local agricultural surplus funds investments in urban manufacturing. In the second chapter, I examine the relationshipbetween natural resource wealth and political outcomes. The interaction of mineral deposit locations and global price changes provide exogenous variation in the value of mineral wealth of state legislative assembly constituencies in India. I find that margins of victory, incumbency advantages and politician criminality are increasing in local mineral wealth. I test three channels for the criminality effect: (i) greater criminality in office; (ii) adverse selection of politicians into the political system; and (iii) greater success of criminal candidates in elections, finding the strongest evidence for the third effect. Finally, in the third chapter, I evaluate the importance of transportation costs to rural economicdevelopment. I take advantage of the allocation rules of a large-scale road construction program in India to estimate the impact of village roads on nonfarm economic activity. I find that new paved roads lead to large increases in village employment. Roads lead to an increase in firm size, suggesting that firms are inefficiently small when transport costs are high. Further, I find evidence that roads are most effective in the presence of electricity, suggesting complementarities between infrastructural investments.
The historical evidence presented in section 2.5 and the insignificance of pre- treatment effects justified an identification strategy based on raw proxies for mili- tary recruitment. As a further robustness check, I present an instrumental variable (IV) approach based on the classification of districts in terms of their recruitment potential by British recruitment officers. My key source of information for this exercise is a set of publications by Captain A. H. Bingley, who wrote detailed handbooks for the recruitment of Sikhs and Dogras (Bingley, 1897, 1899). 45 Ba- sed on the qualification of districts in these publications, I construct an indicator variable to measure “recruitment suitability”. For recruitment suitability to be a valid instrument, it needs to be correlated with the proxy for military recruitment and it cannot influence the observed literacy pattern through any other channel than through military recruitment (as proxied by war deaths). Given that the recruitment officers were led in the first place by a wish to identify the best figh- ting races, regardless of their average willingness to enlist, one could expect the classifications made by these officers to have no relationship with the determi- nants of literacy in these Hindu-Sikh communities. Moreover, the assessments of recruitment suitability were made well before the start of the First World War. The information provided by Bingley differs for each publication. For Sikhs, Bin- gley reports a ranking of tahsils (sub-districts) based on their suitability for mi- litary recruitment (ranging from “very good” to “very bad”). I create a score for each tahsil within a district, ranging from 0-1 (where 1 corresponds to “very good”) and I use the average score. For Dogra recruits, information is only available on which tahsils make the “best” recruitment grounds (without further distinction). I assign a district “1” to each district containing a tahsil that was considered as a top recruitment ground. Since Bingley’s detailed assessments are only available for Hindu-Sikhs, I have to limit the IV analysis to this religious group. 46
Tourism is one of the most visible and fastest growing facets of globalization. Despite its impres- sive scale as a channel of market integration, existing empirical evidence of tourism’s economic implications is rather limited. This paper proposes a novel empirical strategy to contribute to our understanding of this question. To address the many endogeneity concerns that arise when causally relating tourism to economic outcomes, I propose an instrumental variable strategy that exploits geological and oceanographic variation in beach quality along the Mexican coast- line. I then apply this methodology to answer one particular question of policy interest. From a trade theory perspective, tourism constitutes exports of non-tradable amenities and services via traveling consumers rather than shipping goods. Tourist arrivals thus lead to an increase in local consumption expenditure that resembles the spending effect in neoclassical models of the Dutch disease. The arising question is whether tourism negatively affects the competitiveness of tradable production sectors. I find that while conventional regressions display a strongly significant positive correlation between tourism GDP and municipality industrialization, this relationship is reversed in a statistically and economically significant way in instrumental vari- able estimations. In the light of additional evidence that I document on factor immigration as a consequence of tourism, these results should be interpreted as a lower bound compared to a cross-country setting where factors are less mobile to follow tourism induced relative price movements.
Saboori et’al (2012) established a long-run as well as causal relationshipbetweeneconomic growth and carbon dioxide (CO2) emissions in Malaysia for the period 1980-2009. The variables used are per capita CO2 emissions, and per capita real GDP with the use of ADF & PP unit root test, ARDL, VECM Granger Causality econometrics techniques. The Granger Causality test based on the Vector Error Correction Model (VECM) presents an absence of causality between CO2 emissions and economic growth in the short run while demonstrating unidirectional causality from economic growth to CO2 emissions in the long run. According to the findings, it implies that emission reduction policies and more investment in pollution abatement will not hurt economic growth and could be a feasible policy tool for Malaysia to achieve its sustainable development in the long run. Carbon capture and storage, carbon emissions tax and carbon trading scheme can be performed without much concern for long run income. Also suggest that, the policy tools should be accompanied by other possible strategies such as increasing plant efficiency, employing fuel balancing or fuel switching and making enhanced use of renew- able energy.
growth at different countries. The relevant earlier studies can generally be classified into two lines, though; most of practical proofs will continue to be debatable and obscure. The credibility of Environmental Kuznets Curve (EKC) hypothesis is the first to be addressed, in which an inverted-U curve is premised to fit the relationshipbetweeneconomic growth and the environment (Omri et al. 2015). This means that the development of a country exacerbates environmental degradation levels, but it lessens up on attaining a certain level of average revenue. The hypothesis, without any policy interference, is a key to forth coming environmental problems as it predicts economic growth. Grossman and Krueger (1991) initially recommended and confirmed the hypothesis. Later on, it was extensively revised through various data sets and econometric approaches applied by huge research efforts. Contrarily, it was later announced that increased levels of CO 2 emissions are not essentially
In doing so, they threaten their health and lives of their children. As the income and consumption levels of the poor increase there is likely to be net increase in environmental destruction. Meeting increasing consumption demand while keeping environmental degradation at a minimum is an uphill task. As the poor countries desire more economic growth they will use more available natural resources resulting in environmental degradation. Economic growth is vital for giving more options to poor societies, but their models of development must become less energy intensive and more environmentally sound. For industrial counties, too, stopping growth or even seriously slowing it is not much of an option for protecting the global environment. Their slower growth would imperil growth in the poor nations, which are dependent on the markets of the rich nations. Moreover, their continuing growth is needed to generate new environmentally safe technologies and extra margin of resources needed for transfer to poor nations. But the growth models of industrial nations must change drastically. The current quantity of growth should be replaced by quality. In order to create balance betweeneconomic growth and environmental degradation it is necessary to break the cycle of poverty and environmental destruction in the less developed countries (LDCs). However, the earning capacity of under-developing countries (UDC) is continuously declining due to protectionism of the Developed Countries (DCs). According to the United Nations estimate of 2001,annual losses of the developing countries due to lack of access to the goods markets of the developed countries were more than double the total amount of aid received in 2000 from all resources. If lack of access to capital and labour markets is included the total annual losses will be about $500 billion. In addition to trade barriers, the industrialized countries are panelizing the poor developing countries by heavily subsidizing their own agricultural sectors, which is estimated to be around $300 billion per annum. The industrialized countries must change their policies to enable the less developed countries to break vicious circle of absolute poverty (Haq, 1999).
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thermal state, created by different physical parameters. Attaining thermal comfort for all the occupants in a building becomes an elaborate attempt. Human response to thermal comfort is broadly described using three concepts; thermal sensation, thermal preference and thermal acceptability (Langevin et al., 2013). Thermal comfort and sensation are akin but differ in nature, i.e. thermal comfort is subjective, but the sensation is objective (Hensen, 1991). ASHRAE defines thermal sensation as an occupant’s sensory perception of the immediate environment. It has a magnitude and a direction, described in a seven-point scale ranging from -3 (cold) to +3 (warm) (ASHRAE, 2010b). The literature outlines six primary factors that influence the thermal comfort of an occupant. These are air temperature, relative humidity, mean ambient temperature, clothing insulation and metabolic rate (Macpherson, 1973, Goldman, 1999, Berglund, 1977, Macpherson, 1962, Djongyang et al., 2010). Thermal preference of an occupant is the ideal thermal condition in an environment, whereas thermal acceptability is an occupant’s level of approval of the thermal environment (Langevin et al., 2015, Langevin et al., 2013).
The geographic characteristics of water bodies has led to some studies that use more com- plicated regression models. Atasoy et al. (2006) employs spatial econometric techniques to study the effect of urban land use on water quality. Their analysis uses monthly nutrient mea- surements over a four year period combined with monthly measures of urban development, weather variables, and a single year of satellite imagery to control for agricultural land. Their emphasis on rivers and streams is an example of how geography plays an important role in the specification of an appropriate econometric model when studying environmental issues. In their study, upstream river quality clearly affects downstream river quality as it is carried through a stream network, thus it makes sense to explicitly include a spatially-lagged dependent variable while allowing for temporal correlations in the error term. In this study, where the observed unit is lakes, it does not make sense conceptually to include a spatial lag, since lakes do not flow into each other. Instead, it is more appropriate to include a temporal lag of the dependent variable, since lake water remains relatively stationary over time. Spatial correlation is instead introduced through the errors, clustered by hydrological unit.
democracy together reduces terrorism. Now, the composite democracy measure runs from 0 to 24 implying that for higher values of the same (meaning a better functioning democracy), implying that a free press will have a bigger impact in dampening terrorism as the quality of democracy improves. The results are similar when the components of democracy (competi- tion and participation) are considered likewise. Doing the same for column 2 of table 3.5, it is found that considering the median value of the combined civil liberty-political right index, the overall impact is seen to be terrorism mitigating. The above findings are encouraging because on one hand they show that a free press has a strong indirect effect in dampening future occurrences of terrorism, via a strong democracy. The results, on the other hand, also depict that a free press while is effective in combating terrorism almost in all conditions, it performs its role better, the stronger the foundation of the democratic institution. It also shows that while left to itself a democracy can be vulnerable to terrorist attacks, a free press can empower it further and effectively ensure a counter. The implication of the results is clearly depicted in Figure 3.1. The figure is a graphical representation of column (2) of Table 3.4. The figure plots how increase in the index of press freedom is related to number of terrorist incidents in the future. For a given level of democracy, the figure clearly shows that higher press freedom is terror dampening. The figure further reveals that as the quality of democracy itself strengthens, the impact of a free press is strengthened as well. As shown in the diagram, each of the three lines corresponds to three levels of democracies. As the score for democracy increases (implying a stronger democratic institution), the slope of the line becomes steeper meaning a greater impact of a free press.
Experienced venture capital investors are changing the way they invest, pulling money out of venture startups and diversifying into leveraged buyout financing of existing businesses. Meanwhile, the amount of money available for new ventures is actually expanding because newcomers to the marketplace are filling the pipelines of financial supply. The Wall Street Journal reported that the venture market is bifurcating. Venture capitalists raised $21.8 billion in 2004, $29.9 billion in 2007, and $18.6 billion in 2009. At the same time, established venture investors were reducing their risk exposure to the venture capital market. Harvard, Princeton, Stanford, and Boston Universities were reported to be joining the Ohio Public Employees Retirement System in cutting their venture capital investment targets. One university money manager told a Wall Street Journal reporter that ―the smart money is rotating out, and the dumb money is rotating in‖ (Pettypiece, 2004). One fear among investors is that too much money may be going after too few quality deals. Thomson Venture Economics reported that venture funds lost 17% from 2004 to 2009. The flow of money into the venture market by new investors has resulted in funds being able to increase both their fees and their cut in any future profits. This has encouraged experienced investors to pursue other investment options.
is income per capita (averaged over the period 1980-2009) in logs. In each of the first three models, rainfall volatility has a significant negative effect on in come in both regimes. The other geography variables, m a xtem p and landcoastal (entered separately in models 2 and 3) only appear to have a significant effect on income within the poor regime. In contrast to some of the existing litera ture on the fundam ental sources of economicdevelopment, models 4, 5 and 6 dem onstrate th a t the geography variables remain significant, at least w ithin the poor regime, even when controlling for institutions or socio-cultural homogeneity. These results indicate th a t geography variables arc better a t explaining income for relatively poor countries, while the institutions and socio-cultural variables appear to be better predictors of income within the rich regime.^® Again, the results fit very well with the characterisation of economicdevelopment presented in the theoretical section. In particular, the finding th a t geography variables - and rainfall volatihty in particular - are significant predictors of income for rel atively poor countries, but no longer exert a significant effect on income within the rich regime (once institutions and culture are controlled for) corresponds to the theoretical prediction th a t relatively poor countries are vulnerable to shocks and chance events, but th a t this vulnerability is reduced as development leads to greater diversification of economic activity.
There are two main challenges in constructing satellite-based images of deforesta tion. First, humid tropical regions like Indonesia have persistent cloud cover th at shrouds the region year round. This makes it impossible to use high-spatial resolution sensors, like Landsat, which are usually used to measure forest cover change (Asner, 2001; Ju and Roy, 2008). Since these satellites typically only revisit the same area once every 1-2 weeks, cloud-free images are rarely recorded. Instead, it is necessary to draw on moderate-resolution sensors, such as the MODIS th a t pass over the same spot every 1-2 days. This considerably increases the likelihood of obtaining some good quality images, but at the cost of 250m by 250m resolution instead of the ap proximately 40m by 40m resolution available via Landsat. We start with the basic thirty-two day composites of the MODIS Land Surface Reflectance bands (Vermote et al., 2002) and the MODIS Land Surface Temperature Product (Wan et al., 2002) available on the NASA website, which aggregate daily images into monthly images to reduce cloud effects. We further aggregate them into annual composites to produce a cloud-free image of each pixel.
The United States is the largest immigrant country of the world. Over last three decades, immigrants fraction of the total employment in the United States has risen 6.9% to 17.2%. During the same period, immigrant entrepreneurs who receive great attentions account for a much larger share of the total entrepreneur population, from 7.2% to 20.8%. Although immigrant entrepreneurs are frequently discussed , most work doesn’t involve quantitative examination on their effects. Some papers are descriptive [Fai12, FL15, Hun11, KK16]. Some researchers focus specially on high-tech sector [Sax00, WSR07]. We quantify how immigration to the United States and the rest countries of the world affects the welfare of the US natives and people in the rest of the world. We further explore the interaction between immigration and international trade.
even a well-designed tax system might be undermined by poor administration. However, the human capital variable might go some way to capturing citizens’ ability to understand and comply with tax laws, and the inclusion of the tax level (as a share of GDP), to an extent, serves as a control for the ability of the government to administer the tax system. 102 Parallel to difficulty in accounting for the ability of a country to collect different taxes, it is also difficult to control for the cost of collecting different types of taxes. The above analysis, and related studies in the literature, assume that the costs of collecting different taxes are equal. This is, of course, unlikely to be true in practice. Similarly, studies of this nature assume that tax design does not matter for growth but again, it obviously does. IMF (2013) makes this clear, noting the difference between a corporate tax on rents and one on total returns; the former would not affect the marginal incentive to invest whilst the latter most certainly would. Whilst the assumption of revenue-neutrality makes possible this kind of empirical analysis, there may be limits to the insights presented; many tax authorities in developing countries may altar their tax mix in the hope that the tax ratio itself increases. Furthermore, the magnitudes of the coefficients are quite small, suggesting limited direct effects of any RN changes in the tax mix on long run GDP growth rates. Finally, the distinction between domestic taxes on goods and services and trade taxes is often somewhat blurry, especially in developing countries; whilst one country collecting VAT at the border might classify this as a trade tax, the next may count it as a tax on goods and services. Thus, the results that distinguish between domestic consumption and trade taxes should be interpreted with this in mind. It is hoped that future development of the GRD will seek to improve in this respect.
but also on the types of recipients’ consumption. For example, the givers may prefer when the recipients spend cash gifts on education or business investment, as opposed to on gambling activities and alcohol consumption. The utility of a paternalistic giver increases with the recipient’s consumption of virtue goods and decreases with the recipient’s consumption of vice goods (Pollack 1998). In this framework, givers may choose to give partially or entirely in form of in-kind. They may send the same or less amount of cash. They also may not necessarily increase the total amount of gifts. However, compared to cash transfers, in-kind transfers usually incur larger transactional costs such as shipping and handling fees, making in-kind transfers less attractive even for a paternalistic giver. With better logistics and technology that lower shipping and transactional costs can help improve the efficiency of gift-giving, allowing more givers to give in form of in-kind and increase the values of giving. Information asymmetry and heterogeneity in preference across household members are among the main factors that explain the inefficiency in resource allocation within households (Udry, 1996; Dublo and Udry, 2004; Mazzoca, 1997; De Mel et al, 2009; Robinson, 2011). Ashraf (2009) shows that observability and communication between spouses has a significant impact on household financial decisions. Schaner (2013) provides experimental evidence that households reach an inefficient level of savings due to the heterogeneity of time preferences across household members. Thus, with information asymmetry and preference heterogeneity, both givers and recipients seem to have incentives to influence each other’s financial decision. Several studies provide evidence of a paternalistic giving incentive. A lab-in-field exper- iment result by De Arcangelis et al. (2015) shows that migrants raise remittances by over 15% when remittances are labeled as for education. They also remit 2.2% more when the money is sent directly to schools. An experimental study among El Salvadorian domestic migrants by Ashraf et al. (2013) finds that bank accounts with the ability to monitor recipi- ents expenditure lead to higher savings in bank accounts. However, it is unclear whether the increase in savings is a result of the migrants’ increases in giving or the recipients’ reduction in frivolous spending. De Laat (2008) also finds that Kenyan migrants value financial tools that help them monitor their spouses’ financial activities. Ambler (2013) studies the observ- ability on the migrant side and finds consistent evidence where migrants remit significantly more when their choices are observed and punishable by recipients. Thus, the ability to monitor and control, either through information sharing or spending commitment, seems to play a role in household resource allocation.
on the secondary market at a discount from the face value of the debt title. The NGO redeems the acquired title with the debtor country in exchange for a domestic currency instrument used to …nance environmental expenditures (see Hansen, 1989; Jha and Schatan, 2001; Sheikh, 2008). The …rst agreement was signed between Conservation International and Bolivia in 1987. More recently, such a bilateral deal was signed between the United States and Indonesia, swapping nearly US$ 30 million of Indonesian government debt owed to the United States over the next eight years against Indonesia’s commitment to spend this sum on NGO projects bene…ting Sumatra’s tropical forests (see Cassimon et al., 2009).
In this section I show that a small open economy model tends to underestimates the impact of oil price shocks on GDP. This happens because small open economy models are unable to fully capture international spillovers, which in turn tend to amplify the e¤ect of oil price shocks on economic activity. Indeed, as long as imports are used as intermediate inputs for domestic productions, the e¤ect of oil shocks on GDP will pass not only through the supply side channel, but also through the interplay between imports and exports. In fact, after an oil shock foreign economies, by reducing their productions, will lower their demand of domestic imports, which thing implies a further reduction in the domestic aggregate demand. It is straightforward to show it analytically by mean of small modi…cations to the model that have been developed in the previous section. In particular, I now assume that both the foreign currency value of Foreign imports and the foreign currency price of Foreign intermediate goods are exogenous. I consider only the ‡exible price regime and assume that Home and Foreign have a relative weight of the world economy equal to, respectively, and