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Although the link between oil prices and dollar exchange rates has been frequently analyzed, a clear distinction between prices and nominal exchange rate dynamics and a clarification of the issue of causality has not been provided. In addition, previous studies have mostly neglected nonlinearities which for example may stem from exogenous oil price shocks. Using monthly data for various oil-exporting and oil-importing countries, this study contributes to the clarification of those issues. We discriminate between long-run and time-varying short-run dynamics, using a Markov-switching vector error correction model. In terms of causality, the results differ between the economies under observation but suggest that the most important causality runs from exchange rates to oil prices, with a depreciation of the dollar triggering an increase in oil prices. On the other hand, changes in nominal oil prices are responsible for ambiguous real exchange rate effects mostly through the price differential and partly also through a direct influence on the nominal exchange rate. Overall, the fact that the adjustment pattern frequently differs between regimes underlines the fact that the relationships are subject to changes over time, suggesting that nonlinearities are an important issue when analyzing oil prices and exchange rates.

Population is concentrated in urban areas can cause the external diseconomies on environment if it exceeds the carrying capacity of the space and the urban economy. Otherwise the quality of the environment is getting better, led to the concentration of population in urban areas are increasingly high. This study aims to analyze the relationship of causality between the urban concentration and environmental quality in urban agglomeration areas. The data used in the study of secondary data obtained from the Central Bureau of statistics and the City Government from 2000 to 2013. The analytical method used is the Granger causality and descriptive. Granger causality study results showed no pattern of reciprocal causality, between urban concentration and the quality of the environment, but there unidirectional relationship between the urban concentration and environmental quality. This means that increasing urban concentration led to decreased environmental quality.

The present analysis is devoted to making an empirically based choice among alternate causal explanations. This entails making causal inferences from statistical correlations. While this might, at one time, have constituted a heresy, I believe that the procedure to be followed here will soon be a part of statistical orthodoxy.This is not the place for an extended philosophical discussion of the problem of causality. Yet I would like to make my position on the problem as clear as concise presentation will permit. My basic sympathies are with that school which argues that scientifically relevant causal explanation inheres only in our theories, i.e., that the explained event takes the shape which it does because our postulates and logic preclude any other shape on pain of being themselves incorrect. However, the development of such theory, containing such postulates, is usually the product of an inspired insight on the part of one thoroughly immersed in the manifestations of the empirical phenomenon under consideration. The production and verification of such insight in a systematic and reproducible way is the goal of inductive research. Where controlled experimentation is possible, Mill's canons may apply. Where such experiments are either impossible or impracticable, statistical inference becomes necessary. It is in this situation that the present approach, based upon a model developed by Herbert Simon and others, seems justified.Simon's model is designed to capture the asymmetry in our notions of causality. When one speaks of A as a cause of B, one usually has in mind a unidirectional forcing, and not merely a covariation, or phased covariation.

Several studies have suggested the possibility of reverse causation in the `democratic peace' relationship: that the well-known extreme rarity of wars between democratic nations may be partially or wholly explained by a negative impact of war on democracy. Three kinds of war-on-regime effects are discussed. Anterior effects are regime changes that occur in preparation for wars; concurrent effects are those that occur during the course of a war; and posterior effects are regime changes that occur after a war concludes. Because studies have shown that democratic nations are rarely, if ever, on opposite sides in wars at their start, it is argued that reversed causation may affect the presence of causation from democracy to peace only if nations tend to become more autocratic as they prepare for impending wars. This proposition is examined with the observation of war events involving geographic neighbors or major powers, worldwide, from 1816 to 1992. With interrupted time-series analysis, it is found that nations are about as likely to become more institutionally autocratic as they are to become more democratic in the periods before the onset of wars. Moreover, this pattern holds even for the smaller subset of nations estimated to be democratic in the periods before major wars. These results indicate that studies of regime type and war participation have not been underspecified due to possible reverse causation before the onset of wars, and thus support the notion that the direction of causation in the democracy and war relationship is unidirectional from democracy to peace.

Purpose
This paper aims to analyze the pattern of public debt in Brazil, Russian Federation, India, China and South Africa (BRICS) in a comparative perspective. Besides, an attempt is made to verify the existence of debt overhang as suggested by Krugman (1988) among BRICS nations.


Design/methodology/approach
Annual panel data for BRICS for the period 1980-2016 has been used for the analysis. Percentage ratio method has been used to analyze the pattern of debt. Panel covariate augmented Dickey–Fuller (pCADF) test has been used to verify the time series properties of the variable, while panel cointegration test of Pedroni (1999) is used to check the existence of any co-integrating vector among the variables. Panel Granger causality test is used to check the causality between the variables.


Findings
Co-integration result suggests that there exists a strong long-run equilibrium relationship between debt service, domestic savings, capital formation and economic growth of BRICS nations. From Granger causality test, it is observed that domestic savings and capital formation are Granger caused by debt servicing. The coefficients from fully modified ordinary least squares measure a negative impact of debt service on gross capital formation and gross domestic saving. This suggests that the payment for debt service affects capital formation and gross domestic savings adversely. Thus, it gives primary signals for debt overhang effect in BRICS nations.


Practical implications
Allowing debt service to negatively affect the investment and potential investment will result in slowdown or stagnation in economic growth in the long run, so strategies need to be taken in BRICS nations to check the adverse effects of rising level of debt-service-payment-to-gross national income ratio on domestic savings and capital formation. BRICS nations need to reduce their debt service payment by undertaking appropriate strategy of debt overhaul and fiscal management so that domestic savings and capital formation in the country will not be adversely affected. Besides, BRICS nations need to take measures to augment its domestic savings and capital formations.


Originality/value
To the best of the authors' knowledge, no published works have analyzed the pattern of public debt for BRICS (major developing nations). Debt servicing is also not checked for BRICS in recent papers, considering overhang approach.

The culmination of a long-lasting and impressive research program, this book summarizes the relationship between economic development with income on the one hand and the evolution of institutions on the other; the transition of countries from one economic and social system to another. The author considers the transitions of two types of institutions: The first is external; it is legal-administrative systems with staff and buildings. The political system and the economic system are considered. The second consists of traditions and beliefs. Here corruption and religiosity are considered. Contrary to the claim that institutions are causal to development, this book demonstrates that the main direction of causality is from income to institutions. As countries get wealthy, they become secular democracies with low corruption and a mixed economic system. In this impressive coda, Paldam shows that the evolution of institutions is not causal to the economic growth process but rather follows it.

Ample evidence indicates that a person's human capital is important for success on the llabor market in terms of both wages and employment prospects. However, unlike the efforts to identify the impact of school attainment on labor-market outcomes, the literature on returns to cognitive skills has not yet provided convincing evidence that the estimated returns can be causally interpreted. Using the PIAAC Survey of Adult Skills, this paper explores several approaches that aim to address potential threats to causal identification of returns to skills, in terms of both higher wages and better employment chances. We address measurement error by exploiting the fact that PIAAC measures skills in several domains. Furthermore, we estimate instrumental-variable models that use skill variation stemming from school attainment and parental education to circumvent reverse causation. Results show a strikingly similar pattern across the diverse set of countries in our sample. In fact, the instrumental-variable estimates are consistently larger than those found in standard least-squares estimations. The same is true in two "natural experiments," one of which exploits variation in skills from changes in compulsory-schooling laws across U.S. states. The other one identifies technologically induced
variation in broadband Internet availability that gives rise to variation in ICT skills across German municipalities. Together, the results suggest that least-squares estimates may
provide a lower bound of the true returns to skills in the labor market.

The paper considers the transformation of the political system as countries pass through the Grand Transition from a poor developing country to a wealthy developed country. In the process most countries change from an authoritarian to a democratic political system. This is shown by using the Gastil democracy index from Freedom House. First, the basic pattern of correlations reveals that a good deal of the short- to medium-run causality appears to be from democracy to income. Then a set of extreme biogeographic instruments is used to demonstrate that the long-run causality is from income to democracy. The long-run result survives various robustness tests. We show how the Grand Transition view resolves the seeming contradiction between the long-run and the short- to medium-run effects.

Comorbidity — the clustered occurrence of two traits or disorders — may be studied in genetically informative designs such as the classical twin study, to test whether genetic and/or environmental factors underlying the two disorders are correlated. When a genetic correlation is found, this can be explained by several mechanisms, including pleiotropy (the same genes influencing multiple traits), and causality (one trait causing the other). With a cotwin control design, it can be investigated which scenario is most plausible. In this design, monozygotic twin pairs discordant for the first trait (i.e., one twin is affected, the other is not) are compared in terms of their risk for the second trait: under a causal model, only the twins affected for the first trait will be at increased risk for the second trait. Under genetic pleiotropy, this risk will be increased in both twins because they share the same risk genes. We first discuss the cotwin control design and then illustrate its application with data on migraine and neuroticism that were collected in 5,200 Dutch twins, including 1,648 complete twin pairs (981 monozygotic and 667 dizygotic pairs). There was a significant association between migraine and neuroticism, which could be attributed to genetic and environmental correlations (rG = .27 and rE = .19). In monozygotic and dizygotic twin pairs discordant for neuroticism, the risk of migraine was significantly higher in the twins with a high neuroticism score. This pattern of results is consistent with a causal relationship, suggesting that neuroticism increases the risk of migraine.