Wealth Effects and Consumption: A Panel VAR Approach

Shen, Xin; Holmes, Mark J.; Lim, Steven

doi:10.1080/02692171.2014.983050

Cited by 10 publications

(8 citation statements)

References 46 publications

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“…increases in transparency). Following Simo-Kengne et al (2013) and Shen et al (2015), who consider asymmetric effects in a standard panel VAR framework, we decompose corruption into two variables, one representing positive corruption changes and the other one representing negative corruption changes based on the Corruption Perceptions Index growth.…”

Section: An Asymmetric Panel Var Modelmentioning

confidence: 99%

The effects of corruption on growth, human development and natural resources sector: empirical evidence from a Bayesian panel VAR for Latin American and Nordic countries

Urbina

Rodríguez

2021

JES

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PurposeThe purpose of this paper is to analyze the effects of corruption on economic growth, human development and natural resources in Latin American and Nordic countries.Design/methodology/approachUsing the hierarchical prior of Gelman et al. (2003), a Bayesian panel Vector AutoRegression (VAR) model is estimated. In addition, two alternative approaches are considered, namely, a panel error correction VAR model and an asymmetric panel VAR model.FindingsThe results reveal some relevant contrasts: (1) in Latin America there is support for the sand the wheels hypothesis in Bolivia and Chile, support for the grease the wheels hypothesis in Colombia and no significant impact of corruption on growth in Brazil and Peru, while in Nordic countries the response of growth to shocks in corruption is negative in all cases; (2) corruption negatively affects human development in all countries from both regions; (3) corruption tends to spur natural resources sector in Latin American countries, while it is detrimental for natural resources sector in Nordic countries.Research limitations/implicationsThe panel VAR approach uses recursive scheme identification. The authors have analyzed robustness using alternative ordering of the variables. The authors also have followed two alternatives suggested by the Referee: a panel error correction VAR model and a panel asymmetric VAR model. However, another more sophisticated identification scheme could be used. Also other variables could be introduced in the VAR model.Practical implicationsRegardless of the issue of the “grease” vs the “sand the wheels” debate, corruption should be reduced because it is anyway harmful for human development. The differences in the results for Latin American and Nordic countries show that the effects of corruption have to be assessed considering the different institutional and economic conditions of the countries analyzed.Social implicationsGovernments should seek to reduce corruption because, despite corruption can have mixed effects on economic growth in some contexts, it is anyway harmful for human development. Besides, the finding that in some Latin American countries more activity in the extractive industries is generated by means of corruption confirm the association between corruption and extractivism found by Gudynas (2017) and can explain why there are issues of environmental damage and social conflict linked to natural resources in those countries.Originality/valueThe present study contributes to the literature by presenting evidence on the effects of corruption on growth, human development and natural resources sector in Latin American and Nordic countries. It is the first study on economics of corruption which directly compares Latin American and Nordic countries. This is relevant because there are important differences between both regions since Latin American countries tend to suffer from widespread corruption, while the Nordic ones have a high level of transparency. It is also the first in using a Bayesian panel VAR approach in order to evaluate the effects of corruption.

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Section: An Asymmetric Panel Var Modelmentioning

confidence: 99%

The effects of corruption on growth, human development and natural resources sector: empirical evidence from a Bayesian panel VAR for Latin American and Nordic countries

Urbina

Rodríguez

2021

JES

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“…First of all, it helps us to overcome the endogeneity problem and capture the dynamic effects. In addition, the panel data framework of panel VAR includes fixed effects and thus allows for unobserved individual heterogeneity, which improves the consistency of estimation (Shen, Holmes, & Lim, 2015). Secondly, this method is appropriate for the cases in which N is high, but T is low.…”

Section: Methodsmentioning

confidence: 99%

“…The main assumption about Cholesky decomposition is that the variables that are placed before other variables among the ordering affect all remaining variables contemporaneously, whereas the variables that are placed after other variables have an impact on previous ones only with a lag (Grossmann et al., 2014). This assumption implies that the variables placed earlier in the ordering are more exogenous, whereas the variables placed later are more endogenous (Shen et al., 2015). While ordering the variables, the growth of real GDP per capita is placed as the first variable, since it is the most common and strong variable that gives information about the general situation of an economy, which makes it the most exogenous.…”

Section: Empirical Findingsmentioning

confidence: 99%

Does economic complexity reduce output volatility in developing countries?

Güneri

Yalta

2020

Bulletin of Econ Res

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Economic complexity measures the productive knowledge embedded in an economy by analysing the export structure of countries. Although the recent literature suggests that economic complexity might arise as a useful tool to lower output volatility by both diversifying export bundles and increasing the sophistication of exports, the empirical evidence on this issue is rather scarce. We contribute to the existing literature by investigating the effect of economic complexity on output volatility for a large set of developing countries. To this end, we apply a panel vector auto regression (PVAR) methodology, which allows us to capture the dynamic interrelationships between variables. The findings of the paper robust to the alternative specifications reveal that economic complexity affects output volatility negatively. Hence, economic policies aimed at diversifying productive capabilities and export bundles should be one of the major priorities in developing countries.

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“…Na literatura verifica-se, em pesquisas, a relação da Riqueza (Davis & Palumbo, 2001;Mehra, 2001;Bertaut, 2002;Donihue & Avramenko, 2007;Shen, Holmes, & Lim, 2015) e do Crédito Bancário (Ellis, 2005) no Consumo, ou seja, a Riqueza Humana, a Riqueza Financeira e o Crédito Bancário influenciam o Consumo. Embora o Crédito Bancário e o IED apresentem ligações com Consumo, estas não são perceptíveis nestas figuras.…”

Section: Orientação Ao Consumounclassified

“…Para a Riqueza Humana e Riqueza Financeira, espera-se sinal positivo de seus coeficientes na regressão com o Consumo (Davis & Palumbo, 2001;Mehra, 2001;Bertaut, 2002;Donihue e Avramenko, 2007;Shen, Holmes, & Lim, 2015).…”

Section: Operacionalização Das Variáveis Utilizadas Nas Regressõesunclassified

Brics: Liquidez, Consumo E Relevância De Políticas De Produtividade E De Comércio Internacional Para O Ied

2020

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É avaliada a relação da expansão da liquidez ao setor privado e dos fluxos de IED com o Consumo no BRICS. Os resultados das regressões de dados em painel empregadas indicam que: (i) enquanto o IED tem relação negativa com o Consumo, há a ligação positiva entre o Crédito Bancário e o Consumo, e este não tem persistência; (ii) o relacionamento do Consumo com Crédito Bancário é maior do que com a Riqueza Financeira, a Riqueza Humana e o IED; e iii) a majoração da produção é orientadora do IED. Com base nestes resultados o artigo contribui aos estudos acerca do Crédito Bancário, Consumo e IED, bem como aos formuladores de políticas econômicas, cujas decisões impactam a Contabilidade Nacional, com as seguintes recomendações: no BRICS, o Consumo não é o orientador do IED, mas a majoração da produção interna do país que, caso não seja consumida internamente, pode ser direcionada ao exterior. Neste sentido, para atrair o IED, é importante estimular a produtividade e o aumento das exportações simultaneamente. Além disso, dada a ligação entre Consumo e Crédito Bancário, e entre Crédito Bancário e estabilidade monetária, merece atenção a relação entre as políticas de estabilidade monetária e de sustentação do Consumo pelo crescimento do Crédito Bancário. Isso porque o Crédito Bancário pode alcançar níveis elevados de difícil adequação, ocasionando aumento da instabilidade econômica no longo prazo.

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Wealth Effects and Consumption: A Panel VAR Approach

Cited by 10 publications

References 46 publications

The effects of corruption on growth, human development and natural resources sector: empirical evidence from a Bayesian panel VAR for Latin American and Nordic countries

The effects of corruption on growth, human development and natural resources sector: empirical evidence from a Bayesian panel VAR for Latin American and Nordic countries

Does economic complexity reduce output volatility in developing countries?

Brics: Liquidez, Consumo E Relevância De Políticas De Produtividade E De Comércio Internacional Para O Ied

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