Search results

AbstractThis paper examines the dynamics of socio‐economic inequalities in Indonesia over the last four decades. We apply a club convergence test to provincial panel data on four socio‐economic indicators: per capita gross regional product, the Gini coefficient, the school enrolment rate, and the fertility rate. We find that there is no single equilibrium steady state path for all these indicators in Indonesia. Instead, the data suggest that there exist two groups, with provinces converging within each of these two groups, but not between these groups. Finally, we identify the provinces that are catching‐up and those that are falling behind in terms of the various socio‐economic indicators.

SUMMARYStructural Funds are the most intensively used policy instrument by the European Union to promote economic growth in its member states and to speed up the process of convergence. This paper empirically explores the effectiveness of European Structural Funds by means of a panel data analysis for 13 countries in the European Union. We show that – on average – Structural Funds are ineffective. For countries with a 'proper' institutional framework, however, Structural Funds are effective. The latter result is obtained for a wide range of conditioning variables, such as openness, institutional quality, corruption and indicators for good governance. It is robust to a wide range of robustness tests.

This paper addresses the existence of an Environmental Kuznets Curve for China, using a sample of 30 regions, covering the period 1982–1997. The types of pollution included are wastewater, waste gas, and solid waste. We consider the development of the sources of pollution in a pooled cross-section analysis with pollution in absolute levels, in per capita terms, and relative to real Gross Regional Product (GRP). At intermediate levels of GRP per capita, the increase of solid and gas emissions tends to decelerate, but it accelerates again at high levels of GRP per capita. Water pollution decreases with per capita GRP. We also predict future waste gas emissions.

Structural funds are the most intensively used policy instrument by the EuropeanUnion to promote economic growth in its member states and to speed up the process ofconvergence. This paper empirically explores the effectiveness of European Structural Fundsby means of a panel data analysis for 13 countries in the European Union. We show that onaverage Structural Funds are ineffective. For countries with the right institutions,however, Structural Funds are effective. The latter result is obtained for a wide range ofconditioning variables, such as openness, institutional quality, corruption and indicatorsfor good governance.

Structural funds are the most intensively used policy instrument by the EuropeanUnion to promote economic growth in its member states and to speed up the process ofconvergence. This paper empirically explores the effectiveness of European Structural Fundsby means of a panel data analysis for 13 countries in the European Union. We show that – onaverage – Structural Funds are ineffective. For countries with the 'right' institutions,however, Structural Funds are effective. The latter result is obtained for a wide range ofconditioning variables, such as openness, institutional quality, corruption and indicatorsfor good governance.

This paper presents the findings a meta-analysis identifying the causes of variation in the impact of monetary policies on economic development. The sample of observations included in our meta-analysis is drawn from primary studies that uniformly employ Vector Autoregressive (VAR) models. Our findings reveal that capital intensity, financial deepening, the inflation rate, and economic size are important in explaining the variation in outcomes across regions and over time. Differences in the type of models used in the primary studies also significantly contribute to the explanation of the variation in study outcomes.

The potential interactions among governmental policies, investments andeconomic growth are complex and manifold. This paper will perform a systematic comparative analysis of the various economic insights that are currently available on these complex relationships, both theoretically (by a selective literature review) and empirically (by reviewing the empirically obtained insights). Despite the wide variety of potential theoretical relationshipsbetween government expenditures, taxation and growth, most empirical analyses are restricted to simple linear regressions of growth on some measure of government expenditures. We will indicate directions for future empirical research that may enrich our knowledge about the complex relationship between fiscal policies and economic growth, not only nationally but also regionally.

AbstractThis article empirically investigates the contribution of different forms of diplomatic representation to the bilateral trade flows (both exports and imports) of a group of 63 countries. The authors report on the construction of a data set that covers 10,524 diplomatic representations. They use these representations as one of the explanatory variables in an applied trade model (the gravity model) for 3,730 bilateral trade flows in order to measure to what extent these representations are economically effective, in the sense that they are associated with larger trade flows. The authors distinguish different forms of international representation in the field of economic diplomacy (such as honorary and career consulates, embassies and embassy branches, and trade and other offices) and find positive and highly significant effects for embassies but mixed results for the other forms of representation. Finally, the authors provide a comparative perspective on the effectiveness of the 63 countries' foreign services and classify the countries according to the average performance of their network of foreign representations.

As part of the Kyoto Protocol, many countries have committed themselves tosubstantially reduce the emission of greenhouse gases within a politically imposed timeconstraint. Investment subsidies can be an important instrument to stimulate the adoption ofenergy-saving technologies to achieve emission reduction targets. This paper addresses theimpact of adoption subsidies on the amount of energy savings, taking into account endogeneityand uncertainty of technological progress. Neglecting these two characteristics oftechnological progress tends to result in overestimation of the short-run effectiveness ofinvestment subsidies, whereas the effects on long-run effectiveness are ambiguous.

This paper employs Vector Autoregression (VAR) models to measure the impact of monetary policy shocks on regional output in Indonesia. Having incorporated a possible structural break following the aftermath of the 1997-98 Asian Crisis, the impulse response functions derived from the estimated models reveal substantial cross-region variations in policy responses in terms of their magnitude and timing. Our work complements the existing literature by providing insights from a developing country. The results support previous findings that the differential regional effects of monetary policy are significantly related to sectoral composition (especially the share of manufacturing), providing evidence for the relevance of the interest rate channel of monetary policy. We also find that firm-size contributes to the differences, providing evidence for the relevance of the credit channel.

This paper studies the effect of institutions on trade flows, using a gravity modelapproach. We start from a standard gravity equation that incorporates geographical proximity,language, trade policy and common history. These factors reflect the costs of trade acrossgeographical and cultural distance. The quality of governance and the extent of familiaritywith the resulting framework of rules and norms may also affect the costs of doing businessbetween any pair of countries. This paper extends the gravity equation to include proxies forinstitutional quality and institutional homogeneity between trade partners. For this, we useindicators on political stability, regulatory quality, and other proxies that reflect thequality of governance. We test whether institutional homogeneity and institutional quality havean independent impact on the trade volume between pairs of countries. We find that having asimilar law or regulatory framework promotes bilateral trade by 12-18%. Furthermore, a better quality of formal institutions tends to coincide with moretrade. An increase in regulatory quality of one standard deviation from the mean leads to anestimated increase of 20-24% in bilateral trade. Lower corruption similarly accounts for 17-27%extra trade.