Least squares asymptotics in spurious and cointegrated panel regressions with common and idiosyncratic stochastic trends

This article makes an analytical study of the effects of the presence of both common and idiosyncratic stochastic trends on the pooled least squares estimator. The results suggest that the usual result of asymptotic normality depends critically on the absence of the common stochastic trend.

Tariff and environmental policies with product standards

For a small open economy with consumption-based pollution emissions, the first-best optimal policy prescription is free trade along with a Pigouvian tax on emissions. Therefore, a package of coordinated tax reform by replacing tariffs with emission taxes can lower pollution emissions and increase market access and hence improve residents’ welfare and government revenue, as long as the initial tariffs are relatively high. Numerical simulations confirm the results obtained.

Congestion and optimal immigration policy

This paper presents a model to explain the stylized fact that many countries have a low ratio of migrants in their population while some countries have a high ratio of migrants. Immigration improves the income of the domestic residents, but migrants also increase the congestion of public services. If migrants are unskilled and therefore pay low taxes, and the government does not limit access to these services, then the welfare of the domestic residents decreases with the number of migrants. Visa auctions can lower the cost of immigration control and substitute legal migrants for illegal migrants. If the government decides to limit the access of migrants to public services, immigration control becomes unnecessary and the optimal number of migrants can be very large.

On the estimation and inference in factor-augmented panel regressions with correlated loadings

In an influential paper, Pesaran [Pesaran, M.H. (2006). Estimation and inference in large heterogeneous panels with a multifactor error structure. Econometrica 74, 967–1012] proposes a very simple estimator of factor-augmented regressions that has since then become very popular. In this note we demonstrate how the presence of correlated factor loadings can render this estimator inconsistent.

Exposure to a high-fat diet alters leptin sensitivity and elevates renal sympathetic nerve activity and arterial pressure in rabbits

The activation of the sympathetic nervous system through the central actions of the adipokine leptin has been suggested as a major mechanism by which obesity contributes to the development of hypertension. However, direct evidence for elevated sympathetic activity in obesity has been limited to muscle. The present study examined the renal sympathetic nerve activity and cardiovascular effects of a high-fat diet (HFD), as well as the changes in the sensitivity to intracerebroventricular leptin. New Zealand white rabbits fed a 13.5% HFD for 4 weeks showed modest weight gain but a 2- to 3-fold greater accumulation of visceral fat compared with control rabbits. Mean arterial pressure, heart rate, and plasma norepinephrine concentration increased by 8%, 26%, and 87%, respectively (P<0.05), after 3 weeks of HFD. Renal sympathetic nerve activity was 48% higher (P<0.05) in HFD compared with control diet rabbits and was correlated to plasma leptin (r=0.87; P<0.01). Intracerebroventricular leptin administration (5 to 100 μg) increased mean arterial pressure similarly in both groups, but renal sympathetic nerve activity increased more in HFD-fed rabbits. By contrast, intracerebroventricular leptin produced less neurons expressing c-Fos in HFD compared with control rabbits in regions important for appetite and sympathetic actions of leptin (arcuate: −54%, paraventricular: −69%, and dorsomedial hypothalamus: −65%). These results suggest that visceral fat accumulation through consumption of a HFD leads to marked sympathetic activation, which is related to increased responsiveness to central sympathoexcitatory effects of leptin. The paradoxical reduction in hypothalamic neuronal activation by leptin suggests a marked “selective leptin resistance” in these animals.

A dynamic model of tourism, employment and welfare: the case of Hong Kong

The present paper uses a dynamic open-economy model with wage indexation to examine the impact of tourism on employment and welfare. Both short-run and long-run situations are analysed. It is well known that tourism converts non-traded goods into tradable goods. An increase in the demand for a non-traded good raises its relative price, which results in an expansion of the non-traded sector at the expense of the traded goods sector. This output shift raises labour employment in the short run. However, in the long run, the higher relative price leads to higher wages, resulting in a negative impact on labour employment. If the output effect is dominant, the expansion in tourism raises employment and welfare. However, under realistic conditions tourism may lower both labour employment and welfare due to rising costs. These results are demonstrated by simulating a dynamic model for the case of Hong Kong.

Tariff and consumption tax reforms in a developing tourism economy

This paper examines the effects of a coordinated tax reform by replacing import tariffs with point-by-point increases in consumption taxes for a small-open developing tourism economy. Foreign tourists demand for the non-traded goods provided in the informal sector of the host economy, resulting in a tourism-induced terms-of-trade effect. The presence of inbound tourism lends a support to positive tariffs even for a small open economy. The indirect tax reform of this kind can increase residents’ welfare and government revenue when the initial tariffs are relatively larger to the consumption taxes.

Tourism, Dutch disease and welfare in an open dynamic economy

This chapter examines the effects of an expansion in tourism on capital accumulation, sectoral output and resident welfare in an open economy with an externality in the traded good sector. An expansion of tourism increases the relative price of the non traded good, improves the tertiary terms-of-trade and hence yields a gain in revenue. However, this increase in the relative price of non traded goods results in a lowering of the demand for capital used in the traded sector. The subsequent de-industrialization in the traded good sector may lower resident welfare. This result is supported by numerical simulations. © 2011 Nova Science Publishers, Inc.

Cross-sectional averages versus principal components

In spite of the increased use of factor-augmented regressions in recent years, little is known regarding the relative merits of the two main approaches to estimation and inference, namely, the cross-sectional average and principal component estimators. By providing a formal comparison of the approaches, the current paper fills this gap in the literature.