C23 - Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal ModelsReturn

This study investigates the impact of public debt on economic growth in a panel of 27 EU economies over the period 2000-2022. As the preliminary analysis suggests a nonlinear relationship between these variables, the debt threshold analysis based on the dynamic panel threshold regression is employed. The results for the whole panel indicate that public debt supports growth below a threshold of 68.7%, but it has a detrimental impact on growth if it is above the threshold. The validity of the findings is confirmed by including the effects of crises, which also indicates that economic growth in countries with debt below the threshold was more resilient to crisis events. The robustness of the estimates is checked using the method of moments quantile regression. However, the analysis of subsamples based on a country's EMU membership and the indebtedness level reveals the variety of debt thresholds, which calls for different fiscal governance across countries to reduce the negative effects of debt on economic growth. Overall, the results emphasize the importance of adequate fiscal space to respond to economic disturbances.

This study investigates the effect of resource rent on infrastructural development in Africa and how governance institutions moderate this relationship. The pooled OLS and the dynamic system GMM estimation techniques are adopted with a panel of 52 African economies over the period 2005-2022. We find that resource rent significantly hampers infrastructural development in Africa, thereby reflecting the prevalence of the "natural resource curse" phenomenon. We also find that the unconditional effects of governance institutions are mainly negative and significant, which aptly reflects the presence of weak institutions in Africa. Interestingly, our results also show that low institutional quality in the region intensifies the adverse effect of resource rent, while a higher level of institutional quality in the region moderates the adverse effect of resource rent. These findings remain consistent with components of resource rent, such as forest rent, oil rent and coal rent. Consequently, we emphasize the policy implications of these findings, which mainly underscore the need for policymakers and leaders in Africa to embrace institutional reforms that will ensure transparent resource management, increased infrastructural investment and sustainable infrastructural development on the continent.

Remittances are a major source of income for many countries. In this regard, the importance of remittances to national economies is increasing. Altruism and self-interest are the two main motivations for remitting. Economic policy uncertainty may determine which of these motivations is more prevalent. Therefore, the aim of this study is to examine the altruism and self-interest hypotheses. In this study, unbalanced panel data are used to analyse the remittances received by the top 10 countries. These countries account for half of all remittances in the world. Due to cross-sectional dependence in our dataset, we need to use methods with robust standard errors. The results of four different estimation methods used for panel data are consistent. Economic policy uncertainty has a negative impact, whereas economic growth has a positive impact on remittances. These findings indicate that people who send remittances act out of self-interest. Trade openness contributes to an increase in remittances. Furthermore, the wealth effect shaped by self-interest leads to an increase in remittances from workers.

We investigate the effects of trade openness and international financial inflows (including foreign direct investment, remittances and foreign aid inflows) on Africa's productive capacity and how governance institutions are moderating these effects. We adopt the dynamic system GMM modelling framework and the Bun and Carree (2005) bias-corrected least square dummy variable estimator with a panel of 43 African economies. We also use the Driscoll and Kraay (1998) standard error fixed effect estimation, which controls for cross-sectional dependence to provide robustness check. We find that trade openness and the various components of international financial inflows are significant drivers of productive capacity in Africa, and that governance institutions are moderating and enhancing their effects. We also find that renewable energy consumption, human capital development and infrastructure development are promoting Africa's productive capacity. We highlight the policy implications of these findings, which among others, encourage policymakers and leaders in Africa to focus on policies that can enhance cross border trade, attract international financial inflows and entrench high-quality institutions.

This study investigates the effects of information and communications technology (ICT) on economic growth. Our study focuses on 16 MENA countries from 1995 to 2018. We examine not only the impact of ICT usage and investment but also the moderating role of the quality of national institutions shaping this relationship. The results obtained using the panel ARDL method suggest that while ICT usage drives economic growth, ICT investment alone has a limited effect. Moreover, our research confirms that higher-quality institutions boost the impact of ICT use and investment on economic expansion. These results are essential for policymakers who want to boost ICT's contribution to GDP growth.

The literature on economic uncertainty has focused on the effects of uncertainty on the formal economy. Still, it has not addressed a relationship between uncertainty and shadow economy until now, to our knowledge. Therefore, this paper analyses the dynamic relationship between economic policy uncertainty and the shadow economy using panel vector autoregression estimates exploiting a dataset for 21 countries from 1997-2018. The impulse response analyses in this context reveal a mutual interaction of policy uncertainty and the shadow economy. In this respect, not only is the shadow economy found to respond to shocks in economic policy uncertainty, but also the uncertainty in economic policy appears to increase by a response to shocks in the shadow economy, implying a feedback effect from informal economic activities towards uncertainty. This effect is also thought to be responsible for aggravating negative influences of uncertainty on formal economic activities.

This paper examines various configurations of the formula under the formulary apportionment methodology from the perspective of the explanatory power of the variability in profitability of multinational companies with the aim to identify the best-performing formula based on analytical evidence of panel microeconomic data. The considered configurations of the formula are based on the novel composition of the allocation formula indicated under the BEFIT proposal, preceding the CCCTB proposal, and traditionally used formulas, at the sub-national level, in Canada and the United States. The empirical analysis uses microeconomic panel data obtained from the Orbis database for 77,087 subsidiaries affiliated with 2,283 parent companies observed from 2011 to 2020. Utilising the correlated random effect approach, accounting for time-specific effects, including the time-constant explanatory variables such as economic activity, classified by NACE codes and the EU Member States' jurisdiction, this paper devises a novel formula configuration. Besides a novel configuration of the apportionment formula, consisting of sales, costs of employees, tangible and intangible assets, this paper estimates proportional weights of apportionment factors and concludes with policy recommendations.

This paper examines the relationship between insurance market development and economic growth in EU member states in the period 1998-2018. Our results indicate that there is no causality between premium per capita and GDP per capita growth in the case of 11 out of the 23 analysed countries, including four countries classified as emerging markets. However, in the case of panel data covering all the countries, we determined a two-way causality between insurance market development and economic growth. In the short run, premium per capita has a positive and significant impact on the economic growth as proven in the data panel and in the case of individual countries, except in the case of Ireland and Luxembourg, where the applied model shows only error-correction coefficient values. Besides, our results indicate that premium per capita has a significant positive effect on economic growth in the long run in the case of Belgium, Cyprus, Bulgaria, Romania and Slovenia, i.e., insurance premium is a key determinant of long-term economic growth. The results show a statistically significant long-term positive relationship between premium per capita and GDP growth per capita in the case of a panel analysis of all the observed countries and countries classified as emerging markets. On the other hand, the panel data analysis of the countries classified in the category of developed markets showed a long-term positive relationship, but not a statistically significant one. Since that results indicate that the insurance market development could contribute to ensuring long-term economic stability and growth of observed countries, special attention needs to be paid to the strategy of insurance market development in a changing business environment.

The paper investigates the relationship between the financial distress of European private companies identified by the Altman Z-score and real bankruptcy. We extend the traditional Z-score with the asymmetric effect of economic activity. Our results show higher forecasting performance of the Altman Z-score of large companies in a three-year projection. We argue that our results differ from Altman (1968) because of specific market conditions in Europe that enable prolongation of activity after financial distress is identified. We also emphasize the role of liquidity, size, performance and indebtedness in increasing financial distress forecasting performance. Finally, we extend our prediction model with selected indicators of quality and development of the institutional environment.

This work aims to analyse the existence or non-existence of a decreasing rate of profit in Europe and determine the factors influencing it according to the Marxist theory of profitability. To do so, a panel data model was estimated for seven European countries over more than 60 years (from 1960 to 2021, inclusive). The results obtained allow us to verify the tendency for profitability to fall, which could lead the capitalist system to fail.

Africa has received considerable amounts of external aid over the last two decades without significant improvements in socio-economic conditions on the continent. This study, therefore, examines the effects of foreign aid on growth in Africa, and how institutional quality can moderate these effects. The study used the system generalized method of moments estimation technique and a panel of forty-two African countries over the period 2010-2018. Interestingly, the study established that even though foreign aid impacts negatively on growth in Africa, improving the quality of institutions on the continent can reverse this negative effect. In fact, the study computed a threshold value of institutional quality beyond which foreign aid would be a blessing to Africa. This implies that for foreign aid to contribute meaningfully to growth in Africa, the quality of institutions should improve beyond this threshold. Unfortunately, the average level of institutional quality in Africa is presently below this threshold. The study concluded that policymakers in Africa should take urgent steps to strengthen the quality of institutions on the continent as a means of exploiting the continent's huge foreign aid to drive growth and reduce the excruciating effects of poverty plaguing more than half of its population.

This study aims to investigate the relationship between service exports and productivity in 27 OECD countries by using a panel dataset for the years 1995-2018. In the theoretical context, this relationship is basically handled by the learning-by-exporting and self-selection mechanisms. Additionally, product life cycle and technological gap theories also have implications related to the export and productivity association. In the study, after detecting the cross-sectional dependence, the stationarity characteristics of the exports and productivity series were investigated by Pesaran's (2007) panel unit root tests. The findings of Westerlund (2007) panel co-integration test indicated that there is a long-run equilibrium relationship between service exports and productivity. Common correlated effects estimators also supported this finding and showed that productivity affects exports positively in both short and long run. Finally, Dumitrescu and Hurlin's (2012) heterogeneous panel causality tests showed that there is a unidirectional causal relationship running from productivity to service exports. The findings support the predictions of product life cycle theory and technological gap theory regarding the exports and productivity linkage and indicate the validity of the self-selection mechanism for OECD countries' service exports.

This study identifies systemic break points in a factor pricing model for firms traded on European stock markets around the financial crisis. The aim is to shed light on the systemic risk transfer in explaining average stock returns in the fragmented European exchanges. Our analysis takes advantage of recent development in econometrics and employs models which enable "automatic" detection of factor model break points. We find that Western European exchanges are more closely integrated with American financial markets than Northern European stock exchanges and those in the United Kingdom. However, all exchanges were eventually affected by the systemic shock. The results of this study provide insight into immunisation strategies for portfolios created from European stocks.

This paper examines the influence of relative income on the consumption function, particularly the issue of the precise quantification of the relationship between the propensity to consume and the position of the household in the income distribution represented just by relative income. Mainstream theory of consumption, though it is aware of this effect, for its focus primarily on the aggregate consumption, it doesn't pay much attention to this. However, if it is possible to accurately describe and quantify this so-called relative income effect, it will mean a relevant contribution to the explanation of individual consumption patterns or consumption of income categories. The aim of this work is to find, describe and precisely quantify the impact of relative income on the average propensity to consume on the example of Czech households. To achieve this goal, we use a regression estimation of the dynamic panel using GMM, where the individual panels are set as income categories of households. The results achieved unambiguously confirm the validity of the initial assumption about the existence of functional dependence of the propensity to consume on the relative income and thus it fully supports the idea of interdependent concept of utility and consumption.

We analyze and quantify link between quality of the banking sector and sovereign risk in the states of the European Union (EU) using data over 1999-2014. We employ two market-based measures of the sovereign risk along with several empirically and theoretically motivated variables that characterize banking sector. We perform Bayesian estimations on several panels of countries. Our results show that higher ratio of the non-performing loans represents the most important industry-specific variable that is linked with a heightened rate of the sovereign risk. On the other hand, findings related to the size and depth of the banking sector, along with the capital adequacy ratio, are less clear-cut. Higher penetration of the foreign banks and higher degree of competition characterize a diversified structure of the banking industry that seems to be beneficial for the banking sector stability and is linked with lower sovereign risk.

In this paper, we analyze the extent of the impact of FDI on the host economy according to theoretical predictions. Within a broader context of international trade flows, we focus on inter-industry interactions between a multinational enterprise (MNE) that enters the domestic market and other firms in the economy. We seek to determine if the MNE uses domestic suppliers of intermediate goods or if it purchases its supplies from abroad or from other MNEs entering the downstream sector. Our analysis covers both Western and Eastern European countries over the period 2001-2007. Our results show that FDI increases the demand for intermediary goods. However, domestic producers of these goods can benefit only partially from this positive shock, since they are at the same time crowded-out by MNEs entering the upstream sector as well as by importers.

The Impact of Immigration on Occupational Specialization of European Union Citizens The article tests whether the impact of immigration on native workers differs depending on the business cycle. Previous studies proved that labor mobility and the effect of immigration differs with respect to the business cycle. For the expansionary years was found a sizable relocation of native workers to occupations with more interactive rather than manual content as a response to immigration. This is no longer the case for economy in recession period. However, there is null impact on native employment that does not change with the business cycle. The European labor market has been studied just in the period before crisis. Following the study about Spanish task specialization we would like to see if there is any change of impact of immigration on native task specialization in European Union. We split the data on the time period of expansion and the time period of economic crisis using the European Labor Force Survey. We would like to examine the effect of immigration on task specialization of natives on three groups of countries, West Europe, Germany and Middle and East Europe. The results show that the impact changes with the economic cycle and the country group.

Slovakia is a unitary state with a common legal and macroeconomic environment for all regions. However, such environment may hinder regions with production setting, different from the majority of the regions. Hence, the aim of the following paper is to present an empirical analysis of the production technologies used across Slovak regions and to identify potential regional differences. For this purpose two-factor Cobb-Douglas production function was analysed, using annual historical panel data for NUTS 3 Slovak regions. The panel-data structure allowed the distinguishing of the differences in capital and labour elasticities between the analysed regions and the average of the rest of the regions. Additionally, the same methodology was performed with Cobb-Douglas model built on the first differences of the used data. The results of the two approaches indicate that region "Banskobystrický kraj" has significantly different production setting for capital and labour input than the rest of Slovak regions.

This article presents the methodology to extend the traditional employment-unemployment flows model with a third sector: long-term unemployment. This enables a new range of decompositions of various labour market aggregates which allows for a deeper understanding of the structure and dynamics of a particular labour market. One of possible analyses is conducted in the case of selected EU Member States. Finally, it is shown that transition probabilities into and from long-term unemployment depend on the business cycle in most EU countries.

The goal of this contribution is to evaluate the relevance of the institutional factors and the influence of the single variables on the corruption. The key task is to find not only suitable indicator of the amount of corruption but also suitable approximants of institutional characteristics, else economical characteristics. The important advantage of this article is its focus also on the corruption measured by alternative ways, compared to the often used CPI. From the institutional characteristic view for the corruption fight seems to be important stable legal background. Not less important is also the government stability and its accountability. In the contradiction with the expected hypotheses claiming the strong and resistant bureaucracy to be beneficial against the corruption fight, almost all executed analysis is based on the contra productivity of the bureaucracy independency on the corruption fight. It is also important to mention that the direct and indirect taxes vary with their influence on the corruption.

The article deals with the export credit promotion in the Czech Republic. The econometric analysis of the gravity model of Czech trade shows that the credit support provided by specialized government agency, Czech Export Bank, has a positive but statistically weak influence on export. The other determinants of the Czech export in our model are GDP, distance, gross fixed capital formation, and policy risk. The comparison of estimated tax revenues from the supported projects with government subsidies provided to the Czech Export Bank shows that export promotion does not create a financial burden for the government budget. The budgetary costs of export credit support are offset by the tax revenues generated by supported export.

The Stability and Growth Pact has become a primary fiscal policy framework in all European countries since 1997. Together with Maastricht fiscal criteria it determines the fiscal discipline of integration process. The aim of this study is to evaluate ex-post effectiveness of the fiscal rules from the view of a primary structural balance development during 1991-2007. A method taken for the evaluation was a panel-corrected standard errors regression with fixed effects applied on the former euro zone countries (EA12), "old" EU members (EU15) and finally on the EU25. The results of the econometric estimation indicate that all considered rules were effective even though with different impacts. Furthermore, the analysis suggests that electoral cycle, among others, has strong impact on the primary structural component of public balance. However against theoretical assumptions, there is not a conclusive statistical significance of the government behaviour on the current state in the business cycle.

We consider two markets in our model: wholesale, where producers' supply interacts with distributors' demand, and retail with distributors' supply and consumers' demand. The wholesale market determines the producer price index (PPI), production and indirectly also employment. In the retail market the consumer price index (CPI) is formed. We specify a simple dynamic model with two state variables: CPI and PPI. Real variables - production and employment - are fully determined by CPI and PPI. A supply shock shows itself in instant PPI adjustment, a demand shock in CPI. Thus, in the CPI inflation equation the supply shocks are fully determined endogenously by the wholesale - retail markets relationship and for practical use we should add exogenous demand shock to the equation. On the other hand, it would be suitable to add exogenous supply shocks to the PPI inflation, production and employment equations. In the second part we implement the model on monthly data of EU countries. It will be necessary modify the model specification so that we coped with the problems of seasonality and not exactly the same structure of baskets, used for CPI and PPI computations. We estimate each equation of the model both for each single country separately and for the whole panel.

Panel data are increasingly being used in both macro- and micro-level studies of economic problems. Macro-panel data (i denotes countries) are characteristic by sufficiently long time series to be able to analyze panel spurious regression and panel cointegration. According to the main stream of the economic theory the budget deficits leads to deterioration in the current account balance. The panel long-run causal relation is examined in the case of the four groups of countries. For the Granger causality test the panel cointegration analysis is needed. The panel cointegration relationships were not found in any case. Some similarities in the panels were found in the case of Latin America countries but they are not significant.

The study is an empirical investigation of inflation convergence between CEFTA and EU countries. The question of both groups convergence as well as convergence of each individual countries within those groups is particularly discussed in the paper. Detailed analysis was carried out by use of panel estimation in the individual and in the time setup. The study reveals an unambiguous convergence of all CEFTA inflations towards the EU levels between 1993 and 2000.