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This paper investigates the impact of pandemic-induced uncertainty on the changes in the level and volatility of tourism demand. We estimate a structural VAR model using U.S. monthly data from January 2000 to December 2021 and find that pandemic-induced uncertainty shock has a negative and significant impact on inbound tourism. Our results reveal that, in the long run, a one-standard-deviation shock in the index of uncertainty induced by global pandemic shock explains about 50 per cent of the variations in the demand for tourism. Our findings on the predictive power of pandemic-induced uncertainty on tourism demand has important policy implications for tourism and hospitality management. [ABSTRACT FROM AUTHOR]

We reconcile the steep decline in fertility rates during the demographic transition with the fertility rebound observed in recent decades in high-income countries. The micro-foundations of the optimal choice of agents in our expanded model include endogenous childcare costs and social externalities stemming from human capital, consumption, and fertility norms. Combining these factors with the quality-quantity trade-off in fertility choice explains the inverse J-shaped relationship between fertility and economic development. Moreover, the simulated average fertility rates based on the model are reasonably consistent with the observed pattern of the evolution of the cohort fertility rates in high-income countries. Sensitivity analyses show that the model fits historical cohort fertility rates only when it includes the effects of social externalities and endogenous childcare costs. [ABSTRACT FROM AUTHOR]

We investigate the major factors which drive income inequality in the OECD countries, using long panel data which span the period from 1870 to 2016. We consider two measures of inequality: the Gini coefficient and the income share of the top 10% of the population. Employing the panel vector auto-regression method, we show that a positive shock to the real interest rate and government spending is negatively and significantly associated with income inequality in the middle, as well as at the top end of the income distribution. An increase in real GDP per capita leads to an increase in income inequality, measured by the Gini coefficient, whereas an advance in financial development reduces it. We find that income inequality responds negatively to positive innovation shocks initially, but this effect becomes positive with some time lag for top-income inequality. Educational attainment significantly reduces top-income inequality. Our results are robust to alternative specifications, including the local projection method and estimations based on different samples. We also capture the time dynamics in our series using a time-varying nonparametric panel data model and show that the real interest rate and financial development are negatively associated with income inequality for most of the period in the post-World War II era, while the effect of real GDP per capita is positive and significant over the same period. [ABSTRACT FROM AUTHOR]

This paper investigates whether changes in income inequality affect carbon dioxide ( CO 2 ) emissions in OECD countries. We examine the relationship between economic growth and CO 2 emissions by considering the role of income inequality in carbon emissions function. To do so, we use a new source of data on top income inequality measured by the share of pretax income earned by the richest 10% of the population in OECD countries. We also use Gini coefficients, as the two measures capture different features of income distribution. Using recently innovated panel data estimation techniques, we find that an increase in top income inequality is positively associated with CO 2 emissions. Further, our findings reveal a nonlinear relationship between economic growth and CO 2 emissions, consistent with environmental Kuznets curve. We find that an increase in the Gini index of inequality is associated with a decrease in carbon emissions, consistent with the marginal propensity to emit approach. Our results are robust to various alternative specifications. Importantly, from a policy perspective, our findings suggest that policies designed to reduce top income inequality can reduce carbon emissions and improve environmental quality. [ABSTRACT FROM AUTHOR]

This paper examines the relationship between income inequality and economic growth in a broad panel of countries over the period from 1965 to 2014. We utilize an improved dataset for inequality with reduced measurement errors, which fosters cross-country comparability. In addition, we investigate whether accounting for heterogeneity across countries alters the estimated effect of inequality on growth, and whether the inequality-growth nexus varies with the level of income inequality. Our estimates show that after accounting for heterogeneity, the nonlinear growth effect of income inequality remains statistically and economically significant. We find a threshold effect of inequality on economic growth, and this threshold is higher for developing economies than for developed economies. [ABSTRACT FROM AUTHOR]

This paper examines the relationship between income inequality and economic growth in a broad panel of countries over the period from 1965 to 2014. We utilize an improved dataset for inequality with reduced measurement errors, which fosters cross-country comparability. In addition, we investigate whether accounting for heterogeneity across countries alters the estimated effect of inequality on growth, and whether the inequalitygrowth nexus varies with the level of income inequality. Our estimates show that after accounting for heterogeneity, the nonlinear growth effect of income inequality remains statistically and economically significant. We find a threshold effect of inequality on economic growth, and this threshold is higher for developing economies than for developed economies. [ABSTRACT FROM AUTHOR]

This study examines the impact of fiscal equalization payments on the composition of government spending under endogenous growth theory. Analytical conjectures stemming from the model are tested empirically. As an instrumental variable for within-province variations in provinces' equalization entitlements, we use plausibly exogenous variations in the grant eligibility rule for the Canadian fiscal equalization system. We find that fiscal equalization payments have a significant negative effect on the share of productive expenditures and a significant positive effect on the share of unproductive government expenditures. Furthermore, the results show that fiscal equalization lowers the speed of cross-regional convergence in real gross domestic product per worker. [ABSTRACT FROM AUTHOR]

Feldstein-Horioka hypothesis states that if there is perfect capital mobility, low correlation between domestic investment and savings should be observed. However, empirical analysis failed to confirm the hypothesis. This study attempts to shed a new light on international capital mobility by incorporating the effect of the fiscal balance and the financial balance. Specifically, for a panel of 161 countries over the 1990-2013 period, the extended model is tested in comparison with the existing models of capital mobility. At the aggregate level, strong support is found for the extended model; while, at the region disaggregated level, compared to the existing models the hypothesis of capital mobility holds for a larger number of regions. Our model and estimates are additionally extended to account for the fact that the above mentioned relationships, are conditional on the country's level of financial development. [ABSTRACT FROM AUTHOR]

This paper analyses how corruption-induced income uncertainty affects the relationship between corruption and economic growth. The analysis reveals both the growth-enhancing and deteriorating effects of corruption that transmit through the income and productivity channels, and shows how income uncertainty caused by corruption interacts with both of these effects. In particular, it is found that an increase in bribe rates and the probability of corruption that reduces the burden of regulations generate counteracting effects on income and productivity, where both effects are further aggravated by corruption-induced income uncertainty. On the other hand, a higher burden of bribes imposed by extortive bureaucrats hampers growth unambiguously. However, in a highly corrupt environment, an increase in the incidence of extortive behaviour can be growth enhancing as it reduces income uncertainty, while if corruption levels are relatively low, then a further increase in the incidence of such behaviour deteriorates growth. These findings give us a new insight into why the overall growth effect of corruption is ambiguous. [ABSTRACT FROM AUTHOR]

The existing empirical evidence suggests that in low-income economies, an increase in government spending leads to a reduction of growth. This article aims to explain this empirical fact by considering a growth model that incorporates a two-way relationship between corruption and government spending. That is, government spending gives rise to corruption and rent seeking, which feeds back by distorting the structure and size of government spending. In addition, the cost of corruption depends on the wage rate. Therefore, in low-income economies, increases in government spending tend to generate larger social losses caused by a higher level of rent dissipation and a concomitant rise in corruption and government inefficiency. Consequently, in such economies, an increase in government spending is more likely to result in a decline of economic growth. (JEL H3, O11, O41 ) [ABSTRACT FROM AUTHOR]

Theoretical considerations appear to support the conjecture that stock returns are positively related to growth in the long run. However, the empirical literature does not give unanimous support to the theory. Based on a stochastic general equilibrium model it is argued that the long-run relationship between stock returns and per capita income growth is ambiguous and depends on output volatility. Using a century of data for 20 Organization for Economic Co-operation and Development (OECD) countries it is shown that the relationship between stock returns and growth is positive over the period 1916–1951, in which output volatility was persistent. Outside this period no relationship between stock returns and growth is found. These findings are consistent with the predictions of the theoretical model. [ABSTRACT FROM PUBLISHER]

Using the 2007 household survey data collected by Transparency International Bangladesh, we examine corruption in the education sector in Bangladesh. Our main findings are (i) the incidence of corruption and the amount of bribe increase with the level of red tape, (ii) poorer households, households with a less educated household head, and households with girls studying in school are more likely to be victims of corruption, (iii) households with higher social status are more likely to use informal networks to bypass the red tape or pay less amount of a bribe and, as a result, (iv) corruption is likely to be regressive. [ABSTRACT FROM PUBLISHER]

Based on the production-based Capital Asset Pricing Model (CAPM) principle, this article shows that earnings per unit of capital and the output capital ratio are excellent measures of expected stock returns because they are only temporarily affected by earnings shocks but affected permanently by changes in required share returns. Evidence for the US suggests that the risk premium is currently about 2% and that the covariance between consumption growth and expected returns is substantially lower than previously thought of; thus, reducing the equity puzzle substantially. [ABSTRACT FROM PUBLISHER]

We develop an endogenous growth model à la Barro (1990), augmented with income tax evasion. Unlike many traditional rational choice models of tax evasion, the numerical simulations of our model do not produce counter-intuitive results. Further, we show that: (i) accounting for evasion costs (while capturing the full risk associated with the tax evasion process) is important for obtaining realistic relationships between key model variables; (ii) productive government expenditures explicitly affect the economy's tax evasion rate; (iii) Barro's natural efficiency condition for setting the optimal statutory tax rate holds even in the presence of tax evasion; (iv) given realistic estimates of the public expenditure externality, the average marginal income tax rate in Australia is not too far away from the optimal one; and (v) differences in tax evasion opportunities aggravate inequality over time. [ABSTRACT FROM AUTHOR]

This article argues that high historical excess returns to equity were the result of a severe ex post bias in the period from 1915 to ca 1960 because inflation surprises during this period drove a wedge between ex ante and ex post returns to bonds. Furthermore, it is shown that ex ante and ex post returns to stocks are identical in a steady state. Adjusting the ex post equity premium by the ex post bias reduces the equity premium to an arithmetic mean of 3.3-4.4% over the past 132 years. [ABSTRACT FROM AUTHOR]