Panel unit root tests of purchasing power parity hypothesis: Evidence from Turkey

In this paper, we employ some front page panel unit root tests to examine the validity of the purchasing power parity hypothesis in Turkey. Using monthly observations panel data of nine major county’s currency dates January 2003 through April 2010, we find that panel unit root tests are not rejected the mean-reversion of real exchange rates. Thus, the empirical results indicate significant support for the purchasing power parity holds in TurkeyPurchasing Power Parity, Real Exchange Rates, Panel Unit Root Tests, Floating Exchange Rates

Causality relations between foreign direct investment and portfolio investment volatility

Following the liberalization of financial markets, Goldstein and Razin (2006) show that there is an information based trade-off between foreign direct investment and foreign portfolio investment, our paper examines the causality relations between foreign direct investment and volatility of foreign portfolio investment. Utilizing monthly and quarterly data set of Czech Republic, Poland, Russia and Turkey, volatility of portfolio investments, which indicated evidence of ARCH effects for all four countries, have been estimated by best fitting GARCH (p,q) models. Further, potential causality has been examined by Granger (1969), Sims (1972) and Toda and Yamamoto (1995) test methods. Results indicated that, for Russia and Turkey foreign direct investment has a significant cause on portfolio investment volatility. However for Czech Republic and Poland, there is no such significant relationship has been found. Finally further investigation of a possible structural break due to EU membership could not provide such evidence for Czech Republic and Poland in related variables.Foreign Direct Investment, Foreign Portfolio Investment, Eastern Europe, Causality

Trade and Regional Development in A Developing Country: The Case of Turkey

There is a widespread literature to investigate the relations among increasing trade, economic growth and development; however the relationship between trade and regional development is remained inconsiderable. The aim of this study is, to investigate the interrelationship between trade and regional development in Turkey. Therefore firstly, regional development index is defined for 81 provinces of Turkey for the period from 2002 to 2008. This definition is based on the concept and calculation method of Human Development Index (HDI) of United Nations Development Programme. HDI is taken as a basis because it is a composite measure of education, health, and income. Health and education data used in this paper are Regional Statistics of Turkish Statistical Institute. However, GDP/GDP per capita data are not available for provinces for the period under concern. Several studies obviously show that there is a causality relationship between GDP and energy consumption. Thus, energy consumption statistics are used instead of income data. The seminal approaches of uniform and heterogeneous intra-national space of urban systems (and new economic geography models are considered to be worthwhile. To show the relationship between regional development index and share of volume of trade and between regional development index and trade openness, these approaches are utilized within generalized method of moments procedure in a panel data framework. Accordingly we use three dummy variables as endogenous or exogenous, namely large city, port and border provinces. The empirical findings show that the increases in trade openness are positively associated with future increases in regional development. As a result, large cities have a positive effect in this relationship, while the dummy variables of port and border provinces have not found statistically significant. The link between share of volume of trade and regional development is found out negative, merely when the approach of uniform intra-national space of new economic geography model is considered in our estimation. Furthermore, the results of panel causality tests, the share of volume of trade significantly causes regional development. On the other hand, there is a bilateral causality relationship between regional development and trade openness.

Globalization, Inequality, and Redistribution:Theory and Evidence

This paper constructs a simple theoretical model to study the implications of globalization for inequality and redistribution. It shows that when globalization increases inequality, a policymaker interested in maximizing the sum of welfares of all agents increases redistribution. Empirically, the paper examines the effects of globalization on inequality and redistribution in a panel data set of 140 countries for the period from 1970 to 2012. It finds that both inequality and redistribution have been increasing with globalization. The results are robust to the inclusion of many different controls and the exclusion of outliers

The dynamic impacts of renewable energy and tourism investments on international tourism:Evidence from the G20 countries

This paper investigates the effects of the renewable energy consumption and the tourism investments along with the per capita gross domestic product (GDP), the real effective exchange rate, and trade openness on both tourism revenues (total tourism contribution to GDP) and international tourist arrivals in the sample of the G20 members. The annual data from 1995 to 2015 and the panel econometric techniques are utilized to achieve the objectives of the current paper. The results for the long-run elasticities from the panel fully modified ordinary least squares (FMOLS) estimations suggest that the renewable energy uses and tourism investments have a considerable positive impact on both the tourism revenues and the tourist arrivals. Given these results, it is argued that promoting both renewable energy and tourism investments should be considered as the major driving forces of tourism development in the G20 countries. Given these arguments, policymakers should initiate more of sustainable tourism development policies, which may assist those countries to expand the tourism industry further

How do global financial markets affect the green bond markets? Evidence from different estimation techniques

The green bond market has significantly improved in recent years thanks to the development of financial instruments and the rising climate change concerns. Given this backdrop, this paper investigates the effects of returns in different financial markets, i.e. the United States Treasury Bonds, the Standard & Poor’s stock market, the United States Dollar, Gold, Crude Oil, and Bitcoin on the Green Bond returns (the Standard & Poor’s Green Bond Index) from September 17, 2014, to September 1, 2022. The results from the robust linear and machine learning estimators indicate that the returns of the United States Treasury Bonds and the United States Dollar are negatively related to the Green Bond returns. Meanwhile, Gold returns positively affect Green Bond returns. The quantile regression estimations of Machado–Santos Silva also show that these findings are valid in different quantiles. The paper also discusses policy implications related to climate change and the development of financial instruments to promote green investment

Does energy diversification cause an economic slowdown? Evidence from a newly constructed energy diversification index

Countries have made considerable efforts to diversify their energy sources from fossil fuels to renewables in the last two decades to achieve sustainable economic development. However, it is widely argued that the countries may experience sluggish economic development during the energy transition period due to structural and functional changes in the economic system. Given this backdrop, this study introduces a new measure of energy diversification. It explores its impact on economic development across the panels of low-income, high-income, European Union (EU), the Organization for Economic Co-operation and Development (OECD), and G20 countries. The study uses data from 1995 to 2018 and utilizes Nonlinear Panel Autoregressive Distributed Lag (NPARDL) method. Our findings confirm that the major economies (including G20) realize positive economic growth with increasing long-run energy diversification. However, some countries (OECD and G20) experience negative economic growth due to energy diversification in the short term. The results also disclosed that energy diversification does not favor economic growth in low-income economies in both the short and long term. Therefore, more precautionary measures to be taken into account while diversifying energy sources

Risk Transmissions between Bitcoin and Traditional Financial Assets during the COVID-19 Era: The Role of Global Uncertainties

This paper examines return and volatility connectedness between Bitcoin, traditional financial assets (Crude Oil, Gold, Stocks, Bonds, and the United States Dollar-USD), and major global uncertainty measures (the Economic Policy Uncertainty-EPU, the Twitter-based Economic Uncertainty-TEU, and the Volatility Index-VIX) from April 29, 2013, to June 30, 2020. To this end, the Time-Varying Parameter Vector Autoregression (TVP-VAR) model, dynamic connectedness approaches, and network analyses are used. The results indicate that total spillover indices reached unprecedented levels during COVID-19 and have remained high since then. The evidence also confirms the high return and volatility spillovers across markets during the COVID-19 era. Regarding the return spillovers, Gold is the centre of the system and demonstrates the safe heaven properties. Bitcoin is a net transmitter of volatility spillovers to other markets, particularly during the COVID-19 period. Furthermore, the causality-in-variance Lagrange Multiplier (LM) and the Fourier LM tests' results confirm a unidirectional volatility transmission from Bitcoin to Gold, Stocks, Bonds, the VIX and Crude Oil. Interestingly the EPU is the only global factor that causes higher volatility in Bitcoin. Several potential implications of the results are also discussed

How do weather risks in Canada and the United States affect global commodity prices? Implications for the decarbonisation process

Given that the probability of extreme weather has been dramatically increasing, this study contributes to the existing literature by bridging the relation between weather risks and global commodity prices with a secondary dataset (e.g., weather risks of Canada and the United States, agricultural raw materials price, gold price, and crude oil price). The results from the vector autoregression model and impulse response functions show that rising weather risks increase the price of agricultural raw materials and gold. However, the negative impact of weather risks on the crude oil price is found. Finally, the paper discusses the findings' potential implications (e.g., developing decarbonised supply chains) for decreasing weather risks' effects on commodity market uncertainties