A panel data analysis of the military expenditure-external debt nexus : evidence from six middle eastern countries

While a number of studies examine the nexus between military expenditure and economic growth, little consideration has been give to the effect of military expenditure on external debt. This article examines the impact of military expenditure and income on external debt for a panel of six Middle Eastern countries - Oman, Syria, Yemen, Bahrain, Iran, and Jordan - over the period 1988 to 2002. The Middle East represents an interesting study of the effect of military expenditure on external debt because it has one of the highest rates of arms imports in the world and it is one of the most indebted regions in the world. The study first establishes whether there is a long-run relationship between military expenditure, income, and external debt in the six countries using a panel unit root and panel cointegration framework and then proceeds to estimate the long-run and short-run effects of military expenditure and income on external debt. The study finds that external debt is elastic with respect to military expenditure in the long run and inelastic with respect to military expenditure in the short run. For the panel of six Middle Eastern countries, in the long run a 1% increase in military expenditure results in between a 1.1 % and 1.6% increase in external debt, while a 1% increase in income reduces external debt by between 0.6% and 0.8%, depending on the specific estimator employed. In the short run, a 1% increase in military expenditure increases external debt by 0.2%, while the effect of income on external debt is statistically insignificant.

The effect of inflation and real wages on productivity: new evidence from a panel of G7 countries

This article examines the effect of inflation and real wages on productivity within a panel unit root and panel cointegration framework for the G7 countries over the period 1960 to 2004. The main contribution of the article is to provide panel long-run estimates of the effect of inflation and real wages on productivity in the G7 countries over this period. The article finds that for the panel as a whole a 1% increase in real wages generates a 0.6% increase in productivity, while the effects of inflation on productivity are statistically insignificant for most of the individual countries and for the panel as a whole.

A panel data analysis of the determinants of oil consumption : the case of Australia

The goal of this paper is to examine the determinants of oil consumption for a panel consisting of six Australian States and one territory, namely Queensland, New South Wales, Victoria, Tasmania, South Australia, Western Australia, and the Northern territory, for the period 1985–2006. We find that oil consumption, oil prices and income are panel cointegrated. We estimate long-run elasticities and find that oil prices have had a statistically insignificant impact on oil consumption, while income has had a statistically significant positive effect on oil consumption.

Tourism and economic growth: a panel data analysis for Pacific Island countries

The contribution of tourism to the economic growth of Pacific Island countries (PICs) has achieved significance in the past decade. The shift in the economic policies of the PICs from the late 1980s has been decisively away from import substitution and agriculture to urban-based manufacturing and services sectors. Tourism is the main component of the services sector in the PICs. The contribution of tourism to economic growth in Fiji, Tonga, the Solomon Islands and Papua New Guinea is expected to grow. The authors use panel data for the four PICs to test the long-run relationship between real GDP and real tourism exports. They find support for panel cointegration and the results suggest that a 1% increase in tourism exports increases GDP by 0.72% in the long run and by 0.24% in the short run.

Carbon dioxide emissions and economic growth : panel data evidence from developing countries

In this paper we test the Environment Kuznet's Curve (EKC) hypothesis for 43 developing countries. We suggest examining the EKC hypothesis based on the short- and long-run income elasticities; that is, if the long-run income elasticity is smaller than the short-run income elasticity then it is evident that a country has reduced carbon dioxide emissions as its income has increased. Our empirical analysis based on individual countries suggests that Jordan, Iraq, Kuwait, Yemen, Qatar, the UAE, Argentina, Mexico, Venezuela, Algeria, Kenya, Nigeria, Congo, Ghana, and South Africa—approximately 35 per cent of the sample—carbon dioxide emissions have fallen over the long run; that is, as these economies have grown emissions have fallen since the long-run income elasticity is smaller than the short-run elasticity. We also examine the EKC hypothesis for panels of countries constructed on the basis of regional location using the panel cointegration and the panel long-run estimation techniques. We find that only for the Middle Eastern and South Asian panels, the income elasticity in the long run is smaller than the short run, implying that carbon dioxide emission has fallen with a rise in income.

The productivity-wage and productivity-employment nexus : a panel data analysis of Indian manufacturing

This article investigates the long-run relationship between labour productivity and employment, and between labour productivity and real wages in the case of the Indian manufacturing sector. The panel data set consists of 17 two-digit manufacturing industries for the period 1973–1974 to 1999–2001. We find that productivity-wages and productivity-employment are panel cointegrated for all industries. We find that both employment and real wages exert a positive effect on labour productivity. We argue that flexible labour market has a significant influence on manufacturing productivity, employment and real wages in the case of Indian manufacturing.

Fiscal stringency and fiscal sustainability : panel evidence from the American state and local governments

Most state (and local) governments in the U.S. operate under formal fiscal rules which limit their ability to run budget deficits and resort to debt financing. A priori, one would expect to find evidence in favor of an intertemporally balanced budget, or fiscal sustainability, for these states, especially those characterized by a relatively high degree of fiscal stringency. We test this hypothesis for a panel of 47 state–local government units (1961–2006) using four budget balance definitions and several subsamples defined based on regional classifications, or presence of certain balanced budget requirements (BBRs). Our results, obtained from panel estimation techniques that allow for general forms of serial and cross-sectional dependence, suggest that a sufficient condition for “strong” sustainability is consistently satisfied for the full sample and all subsamples in relation to balances that include special funds and/or federal grants. However, we find evidence consistent with the “weak” version of sustainability for the full sample and some regional subsamples (particularly Far West dominated by California) in at least one of the two balances that exclude these items. Finally, the BBRs seem to matter only in relation to the sustainability of the more narrowly defined balances. We discuss the implications of these findings for the role of fiscal rules and federal grant policies.

The tax-spending nexus : evidence from a panel of US state–local governments

We re-examine the tax-spending nexus using a panel of 50 US state–local government units between 1963 and 1997. We find that, unlike tax revenues, expenditures adjust to revert back to a long-term equilibrium relationship. The evidence on the short-term dynamics is also consistent with the tax-and-spend hypothesis. One implication of this finding is that the size of the government at the state–local level is not determined by expenditure demand, but rather by resource supply. This is consistent with the fact that many US state and local governments operate under constitutional or legislative limitations that seek to constrain deficits.

A panel vector error correction approach to forecasting demand in regional construction markets

Reliable forecasting as to the level of aggregate demand for construction is of vital importance to developers, builders and policymakers. Previous construction demand forecasting studies mainly focused on temporal estimating using national aggregate data. The construction market can be better represented by a group of interconnected regions or local markets rather than a national aggregate, and yet regional forecasting techniques have rarely been applied. Furthermore, limited research has applied regional variations in construction markets to construction demand modelling and forecasting. A new comprehensive method is used, a panel vector error correction approach, to forecast regional construction demand using Australia’s state-level data. The links between regional construction demand and general economic indicators are investigated by panel cointegration and causality analysis. The empirical results suggest that both long-run and causal links are found between regional construction demand and construction price, state income, population, unemployment rates and interest rates. The panel vector error correction model can provide reliable and robust forecasting with less than 10% of the mean absolute percentage error for a medium-term trend of regional construction demand and outperforms the conventional forecasting models (panel multiple regression and time series multiple regression model). The key macroeconomic factors of construction demand variations across regions in Australia are also presented. The findings and robust econometric techniques used are valuable to construction economists in examining future construction markets at a regional level.

A simple test for cointegration in dependent panels with structural breaks

This paper develops a very simple test for the null hypothesis of no cointegration in panel data. The test is general enough to allow for heteroskedastic and serially correlated errors, unit-specific time trends, cross-sectional dependence and unknown structural breaks in both the intercept and slope of the cointegrated regression, which may be located at different dates for different units. The limiting distribution of the test is derived, and is found to be normal and free of nuisance parameters under the null. A small simulation study is also conducted to investigate the small-sample properties of the test. In our empirical application, we provide new evidence concerning the purchasing power parity hypothesis. © Blackwell Publishing Ltd and the Department of Economics, University of Oxford, 2008.

Using panel data to test for fiscal sustainability within the European Union

Most empirical evidence suggests that the sustainability hypothesis, stating that government revenues and expenditures should cointegrate with a unit slope on expenditures, does not hold within the European Union, a finding at odds with many theoretical models. This paper argues that these results can be attributed in part to the use of in-appropriate time-series techniques, and that the use of panel data can generate more accurate tests. By using newly devised panel unit-root and cointegration techniques it is shown that the sustainability hypothesis cannot be rejected when applied to a panel composed of 15 European countries between 1970 and 2004. © 2009 Mohr Siebeck.

Using a panel structure to discuss the Feldstein-Horioka puzzle in developing countries

The purpose of this paper is to test the implications of current account solvency for the savinginvestment correlation in developing countries. Since solvency is a long-run phenomenon, and given that the power of the standard unit root and cointegration tests is low, we exploit the panel structure of the sample of 29 developing countries. We find evidence that saving and investment are cointegrated and that the current account is stationary. Therefore, the Feldstein-Horioka correlations are not a puzzle in the sense they reflect the intertemporal budget constraint. The same results are obtained for different subsamples (Africa, Asia, and Latin America) and for different periods of time (1960-74 and 1975-96). We, then, suggest that an error correction model should distinguish between the long-run correlation, which reflects the solvency condition, and the short-run correlation, which could measure capital mobility.

Long-term relationship between energy consumption and GDP in Latin America: an empirical assessment using panel data

The main objetive of this research is to evaluate the long term relationship between energy consumption and GDP for some Latin American countries in the period 1980-2009 -- The estimation has been done through the non-stationary panel approach, using the production function in order to control other sources of GDP variation, such as capital and labor -- In addition to this, a panel unit root tests are used in order to identify the non-stationarity of these variables, followed by the application of panel cointegration test proposed by Pedroni (2004) to avoid a spurious regression (Entorf, 1997; Kao, 1999)

Investigation of hybridized polyurethane, glass fibre reinforced cement and steel laminate in structural floor plate systems

Sandwich components have emerged as light weight, efficient, economical, recyclable and reusable building systems which provide an alternative to both stiffened steel and reinforced concrete. These components are made of composite materials in which two metal face plates or Glassfibre Reinforced Cement (GRC) layers are bonded and form a sandwich with light weight compact polyurethane (PU) elastomer core. Existing examples of product applications are light weight sandwich panels for walls and roofs, Sandwich Plate System (SPS) for stadia, arena terraces, naval construction and bridges and Domeshell structures for dome type structures. Limited research has been conducted to investigate performance characteristics and applicability of sandwich or hybrid materials as structural flooring systems. Performance characteristics of Hybrid Floor Plate Systems comprising GRC, PU and Steel have not been adequately investigated and quantified. Therefore there is very little knowledge and design guidance for their application in commercial and residential buildings. This research investigates performance characteristics steel, PU and GRC in Hybrid Floor Plate Systems (HFPS) and develops a new floor system with appropriate design guide lines.