Panel evidence from rural Uganda on mobile money, risk sharing, and educational investment

We investigate the influence of the rapidly developing mobile banking service "mobile money" on rural households' capacity to smooth their investment in education following a negative shock. We find that a negative shock reduces per school-age kid educational spending by 9.3 percentage points in families that do not utilize mobile money but by 8.3 percentage points in homes that have used mobile money. The underlying process is a rise in remittance receipts and sender variety as a result of the lower transaction costs afforded by mobile money. We demonstrate that our findings are resistant to alternative processes. We utilize the extension of the mobile money agent network as an exogenous variable in mobile money access.

Research on the Impact of Technological Finance on Financial Stability: Based on the Perspective of High-Quality Economic Growth

This paper investigates the relationship between technological finance, high-quality economic growth, and financial stability. Based on data of 30 provinces (including autonomous regions and municipalities) collected between 2004 and 2017, this paper adopts the method of factor analysis to construct comprehensive indexes of technological finance and financial stability before calculating green total factor productivity as the index of high-quality development, using the CRS Multiplicative Model. Then it constructs the spatial SAC model and PVAR model for analyses of the just-mentioned relationship based on the total sample of the nation and regional samples in eastern, middle, and western China, respectively. The results reveal that (1) All samples, whether the total national samples or regional samples of eastern, middle, and western China demonstrate the positive influence of technological finance on high-quality economic development, with an obvious spatial spillover effect. The impact factor is the highest in the eastern region, while the western region holds the lowest factor among the three. (2) Judging by the general national sample, technological finance has an obvious negative shock effect on financial stability within a short period, but the effect gradually dwindles as time goes by. This rule applies to the sample of the eastern region, as its technological finance poses a short-time negative shock effect on financial stability, before gradually diminishing to 0. Neither western nor middle regions have displayed an obvious shock impact on financial stability.

Analyzing Dynamic Impacts of Deagriculturalization on CO2 Emissions in Selected Asian Economies: A Tale of Two Shocks

The study investigates the symmetric and asymmetric impact of agriculturalization on environmental quality in sample of selected Asian economies for time period 1991 to 2019. For empirical analysis, the study adopted ARDL-PMG and NARDL-PMG approaches. The long-run findings of ARDL-PMG reveal that agriculturalization tends to significantly improve the quality of environment. The empirical outcomes of NARDL-PMG infer that positive shock in agriculturalization results in enhancing environmental quality, however, the negative shock in agriculturalization (i.e., de-agriculturalization) leads to deterioration of environmental quality in the long-run. The findings demonstrate that agriculturalization improves environmental quality and de-agriculturalization mitigates environmental quality. Based on these findings, the study recommends that the relevant authorities should formulate such reforms in the agriculture sector that controls and reduces carbon emissions in Asian economies.

Asymmetric effect of financial development and remittance on economic growth in MINT economies: an application of panel NARDL

The empirical analysis examines the asymmetric effect of financial development and remittance on economic growth in MINT nations (Mexico, Indonesia, Nigeria, and Turkey). The present study utilized panel data covering the period from 1980 to 2019. The research objectives are to address the questions: (a) Is there a long-run association between economic growth and the regressors? (b) Do financial development and remittance trigger MINT nations' economic growth? Moreover, the present study applied both linear panel ARDL and the novel panel nonlinear ARDL to capture the asymmetric impact of development and remittance on economic growth. The outcomes of the linear ARDL disclosed that both financial development and remittance triggers economic growth positively. Furthermore, the outcomes of the NARDL disclosed that both positive and negative shocks in financial development increase economic growth. In addition, a positive and negative shock in remittance increases economic growth in the long-run.

Housing Price Forecasting in Selected Polish Cities During the COVID-19 Pandemic

The COVID-19 pandemic represents a combined supply and demand shock to the financial and housing market but also an unusual negative shock in terms of the health of society (households) and national economy. The fall in housing demand was initially assumed together with price decreases as a consequence of the uncertainty of the health of society, significant falls in stock markets and corporate solvency. However, the results of research in selected Polish cities do not indicate such a significant market recession. This article examines the housing price dynamics and forecasting in Polish cities during the COVID-19 pandemic. The TRAMO/SEATS and ARIMA models were used for the decomposition and forecasting of dwelling time series. The Polish housing market, represented by selected local housing markets, still shows a growing trend despite the COVID-19 pandemic throughout 2020. The housing market may slow down in 2021, but the strong forecasted growth trends in Warszawa and Poznań suggest that there will be no significant price decline in Poland in the near future.

Covid-19 Pandemic and Severity of Economic Impacts: The Indonesian Case

This study tends to examine the impacts of the Covid-19 pandemic on the Indonesian economy with the focus on economic growth, poverty, income distribution, unemployment, tourism sector, and businesses. More specifically, this study tries to answer the following two questions. First, how serious has been the negative shock of the Covid-19 pandemic on the Indonesian economy, especially on economic growth, employment, wages, poverty, inequality, tourism activities and businesses? Second, what were the main economic transmission channels through which the Covid-19 pandemic have caused that negative shock? It adopted an exploratory methodology with a comprehensive review of available literature, including policy documents, research papers, and reports and secondary data analysis. Data used was from the National Bureau of Statistics (BPS). It reveals that the Covid-19 pandemic has affected the Indonesian economy through four main channels: (i) declined domestic demand as a direct consequence of the "anti-Covid-19 impact" policy; (ii) declined export; (iii) declined imports of processed raw materials and auxiliary materials; and (iv) increased poor people as many employees have been laid off, or their wages were cut. As a result, the country's economy experienced a growth contraction of 2.07 percent, the number of foreign tourists visited Indonesia dropped significantly, the unemployment rate as well as the percentage of poor people increased, the Gini ratio experienced an increase, and many companies have suffered huge losses, especially in the tourism sector and also those whose businesses were very dependent on this sector such as transportation and food and beverage companies, as well as hotels and other accommodation provider companies.

Understanding the Size of the Government Spending Multiplier: It's in the Sign

This paper argues that an important, yet overlooked, determinant of the government spending multiplier is the direction of the fiscal intervention. Regardless of whether we identify government spending shocks from (i) a narrative approach, or (ii) a timing restriction, we find that the contractionary multiplier- the multiplier associated with a negative shock to government spending- is above 1 and largest in times of economic slack. In contrast, the expansionary multiplier- the multiplier associated with a positive shock- is substantially below 1 regardless of the state of the cycle. These results help understand seemingly conflicting results in the literature. A simple theoretical model with incomplete financial markets and downward nominal wage rigidities can rationalize our findings.

Islamic stock markets and COVID-19-induced shocks: simulations with global VAR approach

Purpose This paper aims to make the first attempt to study the transmission of COVID-19 pandemic-induced shocks to the global Islamic stock markets in the midst of the overall macroeconomic environment and cross-country trade linkages. This is made possible by constructing a global vector autoregressive (GVAR) model and with it the authors arrive at noteworthy conclusions. Design/methodology/approach The paper estimates both fixed and time-varying weights GVAR models for 15 Islamic stock markets with 5,000 bootstrap replications and reports impulse response functions. It simulates four shocks associated with the pandemic: first, a standard error negative shock to oil price; second, a standard error negative shock to the global Islamic stock markets; third, a standard error positive shock to equity-based uncertainty index; and fourth, a standard error negative shock to economic activity (inflation). Findings The paper shows that the pandemic engenders immediate negative impacts on the Islamic stock markets with the biggest impacts borne by the USA and China and the least by markets in the Middle East. The study documents the magnitudes of the responses to the shocks and shows that the impacts of the pandemic will take about 20 months to wither completely. Originality/value The findings throw up diversification benefits for investors toward the UAE, Oman, Bahrain and other Middle East markets especially during crisis. It further reveals the need for counter-cyclical measures in all countries to curtail the negative impacts of the pandemic which could linger for up to 20 months.

The Long-Lived Cyclicality of the Labor Force Participation Rate

How cyclical is the U.S. labor force participation rate (LFPR)? We examine its response to exogenous state-level business cycle shocks, finding that the LFPR is highly cyclical, but with a significantly longer-lived response than the unemployment rate. The LFPR declines after a negative shock for about four years—well beyond when the unemployment rate has begun to recover—and takes about eight years to fully recover after the shock. The decline and recovery of the LFPR is largely driven by individuals with home and family responsibilities, as well as by younger individuals spending time in school. Our main specifications measure cyclicality from the response of the age-adjusted LFPR, and we show that it is problematic to use the unadjusted LFPR when estimating cyclicality because local shocks spur changes in the population of high-LFPR age groups through migration. LFPR cyclicality varies across groups, with larger and longer-lived responses.

Lending Standards and Borrowing Premia in Unsecured Credit Markets

Using administrative data from Y-14M and Equifax, we find evidence for large spreads in excess of those implied by default risk in the U.S. unsecured credit market. These borrowing premia vary widely by borrower risk and imply a nearly flat relationship between loan prices and repayment probabilities, at odds with existing theories. To close this gap, we incorporate supply frictions – a tractably specified form of lending standards – into a model of unsecured credit with aggregate shocks. Our model matches the empirical incidence of both risk and borrowing premia. Both the level and incidence of borrowing premia shape individual and aggregate outcomes. Our baseline model with empirically consistent borrowing premia features 45% less total credit balances and 30% more default than a model with no such premia. In terms of dynamics, we estimate that lending standards were unchanged for low risk borrowers but tightened for high risk borrowers at the outset of Covid-19. Borrowing premia imply a smaller increase in credit usage in response to a negative shock, which this tightening reduced further. Since spreads on loans of all risk levels are countercyclical, all consumers use less unsecured credit for insurance over the cycle, leading to 60% higher relative consumption volatility than in a model with no borrowing premia.