Cross-sectional data from twins contain information that can be used to derive a test of causality between traits. This test of directionality is based upon the fact that genetic relationships between family members conform to an established structural pattern. In this paper we examine several common methods for empirically testing causality as well as several genetic models that we build on for the Direction of Causation (DoC) model. We then discuss the mathematical components of the DoC model and highlight limitations of the model and potential solutions to these limitations. We conclude by presenting an example from the personality and politics literature that has begun to explore the question whether or not personality traits cause people to hold specific political attitudes.
Cross-sectional data from twins contain information that can be used to derive a test of causality between traits. This test of directionality is based upon the fact that genetic relationships between family members conform to an established structural pattern. In this paper we examine several common methods for empirically testing causality as well as several genetic models that we build on for the Direction of Causation (DoC) model. We then discuss the mathematical components of the DoC model and highlight limitations of the model and potential solutions to these limitations. We conclude by presenting an example from the personality and politics literature that has begun to explore the question whether or not personality traits cause people to hold specific political attitudes.
Purpose Understanding the role of financial intermediaries towards financial development and thereby the growth of an economy, this study aims to examine the long-run relationship between the development of banking and insurance sector and economic growth in India by covering different regimes including the regulated and the liberalized period.
Design/methodology/approach For examining the long-run relationship between these sectors, the study uses VAR-VECM technique. Further, Granger causality test is used to check if there is the presence of any causal link among these sectors.
Findings The findings clearly indicate long-run relationship between economic growth and the development of banking and insurance sector, while the causality results show demand following relationship in the complete period where there is bi-directional causality in the post-liberalized period from insurance to economic growth.
Research limitations/implications As banking development is not found to support economic growth, this raises serious concerns towards the complex role of banks as against theory and demands further analysis to understand their role in an economy.
Practical implications As causality pattern has changed from demand following to bi-directional causality, it is vital to understand the importance of liberalization towards the economic growth of the country as well as the contribution of insurance sector towards economic growth in the liberalized environment.
Originality/value This is the first effort to empirically explore the relationship between economic growth and the development of banking and insurance sector in India by covering the complete period (regulated and liberalized).
PurposeThe purpose of this paper is to investigate the relationship between internet use and democracy in Africa. It examines the non-linearities and causality between the two variables in the short and long run for 38 countries in Africa.Design/methodology/approachThe study is empirical. It uses pooled mean group and causality tests for the sample of 38 African countries.FindingsThe panel long-run and short-run estimates show evidence of significant non-linear relationship between internet usage and democracy. While internet usage is significantly and negatively related to democracy, squared internet usage is significantly but positively related. This suggests that internet usage increases with the decrease of democracy, but after a certain level of internet usage which is the turning point, democracy starts to increase. Additionally, there is uni-directional causality from internet usage to democracy. However, a bi-directional causality exists between squared internet usage and democracy.Research limitations/implicationsThe empirical evidence from this study suggests that internet usage and democracy are highly interrelated to each other in Africa. The findings support that at the macro level, Africa is moving toward a new stage, where internet will lead to improved levels of democracy and digital politics.Practical implicationsRemarkably, the paper shows that democracy displays a quadratic relationship with internet usage. As a whole, the findings indicate a U-shaped pattern: democracy decreases with internet usage, stabilizes, and then increases. In other words, internet usage increases with the decrease of democracy, but after a certain level of internet usage which is the turning point, democracy starts to increase.Social implicationsMany African Governments that have frequently imposed restrictions on internet and social media need to stop. The decline in democracy as internet usage increases may be explained by more severity of these restrictions. However, the findings support that at the macro level, Africa is moving toward a new stage, where internet will lead to improved levels of democracy and digital politics.Originality/valueContrary to previous conceptual papers, the current study empirically investigates the causality between internet and democracy in 38 African countries. The findings indicate a U-shaped pattern: democracy decreases with internet usage, stabilizes, and then increases. In other words, internet usage increases with the decrease of democracy but after a certain level of internet usage which is the turning point, democracy starts to increase.
Cross-sectional data from twins contain information that can be used to derive a test of causality between traits. This test of directionality is based upon the fact that genetic relationships between family members conform to an established structural pattern. In this paper we examine several common methods for empirically testing causality as well as several genetic models that we build on for the Direction of Causation (DoC) model. We then discuss the mathematical components of the DoC model and highlight limitations of the model and potential solutions to these limitations. We conclude by presenting an example from the personality and politics literature that has begun to explore the question whether or not personality traits cause people to hold specific political attitudes. [Reprinted by permission of Sage Publications Ltd., copyright holder.]
In the research, the causal relationships between Bitcoin, gold and oil prices were examined. The data of the research covers the period from 2015 to July 2020 and consists of daily price values. Augmented Dickey-Fuller Unit Root Test was used to see whether the stochastic process changes with time. Bitcoin and gold series do not contain a unit root since the oil series is stationary at the level while the difference is stationary. The reason why the series containing unit roots are not stationary is due to structural breaks or not, was investigated by Bai-Perron Unit Root Test with Multiple Structural Breaks. According to the test, it was determined that the Bitcoin series has one break and two regimes, while the gold series has two structural breaks and three different regimes. Whether the research series are cointegrated or not was investigated with the Gregory and Hansen test. The causality between the series was examined with the Toda-Yamamoto causality test, which is based on the VAR (Vector Autoregression) model and examines the causality in the series regardless of the unit root. A two-way causality relationship was determined between the eight lag-long Gold series and the Bitcoin series. In other cases, a causal relationship has not been established. As a result, we give an evidence that Bitcoin and gold prices series followed a parallel pattern while with oil not. Therefore, investors can add Bitcoin into their portfolios to make balance of the risk and return.
We employ the concept of Granger causality to investigate the root-leaf relationship between the manufacturing and financial services industry in Taiwan's economy. Our empirical results show that manufacturing led finance for the last half century, which is consistent with the pattern of other emerging economies. However, the liberalization of the financial services industry in the 1980s changed the relationship from "manufacturing leads, finance follows" to a feedback system. Accordingly, the financial services industry should play a more important role than previously for Taiwan to maintain its economic growth.
This paper studies the dynamics of violence in the Palestinian-Israeli conflict since the outbreak of the Second (or Al-Aqsa) Intifada in September 2000, during which more than 3,300 Palestinians and more than 1,000 Israelis have been killed. The conflict has followed an uneven pattern, with periods of high levels of violence and periods of relative calm. Using data on the number of deaths occurring each day between September 2000 and January 2005, we estimate reaction functions for both Israelis and Palestinians and find evidence of unidirectional Granger causality from Palestinian violence to Israeli violence, but not vice versa. This finding is consistent whether we look only at the incidence of fatalities or whether we look at the level of fatalities, and is robust to the specification of the lag structure and the level of time aggregation. We find little evidence that violence on either side has a direct deterrent or incapacitation effect. We do find, however, that successful assassination attempts do reduce the number of subsequent Israeli fatalities. We conclude that, despite the popular perception that Palestinians and Israelis are engaged in tit-for-tat violence, there is no evidence to support that notion.
AbstractVenezuela is among the several countries of the world endowed with natural resources such as oil rent and others. The influence of these resources, which can be felt in both economic and environmental development, is capable of impacting sustainable development goals of any country rich in them. Considering the global climate goals, it is essential to investigate the impact of natural resource rent on its sustainable development goals. We applied Venezuelan country‐specific data of 1972–2014 for an insightful study of the country's sustainable development amidst high resource rent with regard to both economic and environmental performance. The principles of the environmental Kuznets curve (EKC) and pollution haven and halo hypothesis (PHH) were considered to ascertain the pattern and effect of the economic growth and foreign direct investment (FDI) on Venezuelan environmental performance. Different methods such as the autoregressive distributed lag (ARDL) dynamics and bounds, structural break, and Granger causality test were applied for an accurate estimation and insightful analysis. From the ARDL estimations, we found an N‐shaped Kuznets curve, which counters the U‐shaped Kuznets, for the case of Venezuela. Both natural resources and FDI are found to impact positively on the environment, and this confirmed the pollution halo hypothesis for Venezuela. Fossil fuel energy source is found to impact negatively Venezuela's environment with positive relationship between energy use and CO2. From the Granger causality finding, a unidirectional Granger causality is found to transmit from FDI to environment, while bidirectional Granger causality is found to transmit between economic growth and environment. With the findings from both analyses, especially from the vector error correction model (VECM) Granger causality, a nexus is established among economic growth, environment, and FDI, which confirmed the pollution halo hypothesis.
The present study builds upon the seminal work of Engel and West [2005, Journal of Political Economy 113, 485-517] and in particular on the relationship between exchange rates and fundamentals. The paper discusses the well-known puzzle that fundamental variables such as money supplies, interest rates, outputs etc. provide help in predicting changes in floating exchange rates. It also tests the theoretical result of Engel and West (2005) that in a rational expectations present-value model, the asset price manifests near–random walk behaviour if the fundamentals are I(1) and the factor for discounting future fundamentals is near one. The study explores the direction and nature of causal interdependencies and cross-correlations among the most widely traded currencies in the world, their country-specific fundamentals and their US-differentials. A new VAR/VECM-GARCH multivariate filtering approach is implemented, whilst linear and nonlinear non-causality is tested on the time series. In addition to pairwise causality testing, several different groupings of variables are explored. The methodology is extensively tested and validated on simulated and empirical data. The implication is that although exchange rates and fundamentals appear to be linked in a way that is broadly consistent with asset-pricing models, there is no indication of a prevailing causal behaviour from fundamentals to exchange rates or vice-versa. When nonlinear effects are accounted for, the evidence implies that the pattern of leads and lags changes over time. These results may influence the greater predictability of currency markets. Overall, fundamentals may be important determinants of FX rates, however there may be some other unobservable variables driving the currency rates that current asset-pricing models have not yet captured.
We build a quasi real-time leading indicator (LI) for the EU industrial production (IP). Differently from previous studies, the technique developed in this paper gives rise to an ex-ante LI that is immune to "overlapping information drawbacks". In addition, the set of variables composing the LI relies on a two-steps dynamic and systematic procedure. This ensures that the choice of the variables is not driven by subjective views. Our LI anticipates swings (including the 2007-2008 crisis) in the EU industrial production - on average - by 2 to 3 months. If revised, its predictive power largely improves. Via a couple of standard empirical exercises we show that the proposed LI (i) forecasts crises' phases better than the ex-post LIs proposed by the OECD and the Conference Board and (ii) captures the interest rate policy pattern rather well. ; Revised Version
AbstractThe problem of causality in economics is still contended by various epistemological alternatives. The article builds on the received view of Darwinism in economics and examines the way in which economics and biology find common ground in concepts and assumptions that reflect causal commonalities of the natural and the social world. We claim that the role the contingent pattern plays in understanding socioeconomic change provides reasons to concede corrections to a rule‐based causal mechanism. The article concludes on the merits of advancing the ontological equivalent of interdisciplinary studies as one possible standard in reference to which to judge the epistemic adequacy of any import.
This paper examines the role of women helping women in corporate America. Using a merged panel of directors and executives for large US corporations between 1997 and 2009, we find a positive association between the female share of the board of directors in the previous year and the female share among current top executives. The relationship's timing suggests that causality runs from boards to managers and not the reverse. This pattern of women helping women at the highest levels of firm leadership highlights the continued importance of a demand-side "glass ceiling" in explaining the slow progress of women in business.
A factual account provides no clear pattern concerning conflict resolution & instigation through sport. Both positions prevail in the social-psychological literature on sport & aggression, while anthropological testing of preliterate societies shows combative sport to be related to warlikeness. Model & conceptual implications are discussed. A stronger concern for sociological analysis will provide a better understanding of the sport contest in its dialectical structure & its sociocultural as well as organizational context. Simple notions of causality & insights from ethology & psychology are insufficient for the analysis of a predominately structural problem of conflict in the sport contest. 1 Table, 2 Photographs, 1 Illustration. AA.
Previous studies that investigated the export led growth hypothesis, relied upon Granger or Sims causality detection approach. Since these approaches employ first differenced variables, any inference could be short-run in nature. In this paper we consider the relation between exports and economic growth to be a long-run phenomenon. After applying Johansen's cointegration technique to establish the long-run relationship between exports and output (in presence of other factors), we rely upon weak exogeneity tests proposed by Johansen to establish exogeneity of exports or output. Annual data over 1960-99 period from 61 countries are used for analysis. The results are country specific and there is no uniform pattern.
