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Purpose: This paper aims to examine the relationship between terrorism and innovation and the moderating role of venture capital. Design/methodology/approach: The paper has used panel data from 140 countries covering the period of 2007–2016 and has analysed the data by using generalised method of moments instrumental variables (GMM-IV) estimation method to control for unobserved endogeneity among the variables. Findings: The authors find that terrorism has negative impact on innovation. Interesting results emerge when we separated the developed countries from others. The results show that the impact of terrorism on innovation is lower in developed countries. This is due to the fact that strong institutional settings in developed countries make the investors confident by providing support and incentives. Better institutional settings in developed countries also help to reduce uncertainty, which maximise innovation and minimise terrorism risk. The authors also find that venture capital positively moderates the terrorism and innovation relationship. This implies that by providing sufficient fund for technological development, venture capital may help to reduce terrorism risk. Practical implications: These results may guide the policy makers to find a business solution instead of lengthy political solution to mitigate terrorism risk in emerging countries. Overall, this paper will provide the basis for improving the counter-terrorism approaches from an innovation perspective. Originality/value: The paper has used terrorism and venture capital data from 140 countries and finds interesting results that may help the policy makers to reduce the effect and intensity of terrorism in emerging countries. [ABSTRACT FROM AUTHOR]

Purpose: The paper attempts to empirically examine the difference in the foreign direct investment (FDI) – private investment relationship between developed and developing countries over the period 2000–2013. Design/methodology/approach: The paper uses the two-step GMM Arellano-Bond estimators (both system and difference) for a group of 25 developed countries and a group of 72 developing ones. Then, the PMG estimator is employed to check the robustness of estimates. Findings: First, there is a clear difference in the FDI – private investment relationship between developed countries and developing ones. Second, governance environment, economic growth and trade openness stimulate private investment. Third, the effect of tax revenue on private investment in developed countries is completely opposite to that in developing ones. Originality/value: The paper is the first to provide empirical evidence to confirm the dependence of FDI – private investment relationship on governance environment. In fact, contrary to the view (arguments) in Morrissey and Udomkerdmongkol (2012), the paper indicates that FDI crowds out private investment in developed countries (good governance environment), but crowds in developing countries (poor governance environment). [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this paper is to empirically appraise the health of banking systems by applying a new theoretical framework based on resilience and stability simultaneously. In line with complex system theories, the authors will consider the dynamics of the banking system as a whole, analysing not only banks individually but also the broad environment in which they operate. For doing so, the authors propose a composite indicator (CI) for analysing the resilience and stability of banking systems of developed countries. The main purpose of the indicator is not to make predictions on future banks' behaviour, but rather to use it as a tool for appraising the overall health of the most salient banking systems. Design/methodology/approach: The authors have designed a theoretical framework of resilience and stability taking into account the review of previous literature. The authors have identified the main factors underlying these two concepts that can be appraised as complementary targets. The authors have applied multiple factor analyses to identify the main determinants of banks' resilience and stability, and the authors have constructed a CI giving different weights to the relevant dimensions previously identified. The authors have tried different model specification and the authors have chosen the simplest model that render better empirical results. The authors construct the resilience and stability indicator for the group of G7 countries, Spain and Portugal, from 2004 up to 2015. Findings: First, resilience–stability indicators for the group of countries analysed reveal quite different patterns in the aftermath of the financial crises. While some countries have improved its relative position within the ranking, the authors find others evolving just in the opposite direction. Second, the relative position of countries in terms of the resilience–stability indicator allows the authors to identify Canada and the USA as examples of best practices. Third, by analysing countries individually the authors will be better able to identify potential weakness and areas for improvement in each case. Practical implications: The evolution of the resilience and stability indicator will serve as an early warning system for policy makers and supervisors in identifying signs of weakness, as well as a useful tool to identify the best practices. Furthermore, this indicator will allow to better assessing the potential vulnerability of banking systems in the advent of a forthcoming crisis. Therefore, this measurement should not be interpreted as an absolute value but as a warning signal of potential weakness in each case. Originality/value: The main contribution of this paper to the existing literature is that it introduces a new reconceptualization of the health of the banking system in line with complex theories. The theoretical background is based on a comprehensive framework of resilience and stability as complementary targets. The CI summarises into a single figure a multidimensional concept like resilience and stability. The variables that the authors have used for the construction of the indicator have been validated by applying multiple factor analysis. The authors have empirically appraise the resilience and stability of a group of advanced economies that encompass the group of the more developed countries in the world and the two European cases that have receive financial support in order to see if there are remarkable differences. [ABSTRACT FROM AUTHOR]

Purpose The purpose of this paper is to examine the determinants of foreign direct investment (FDI) flows from some leading developed countries (the USA, Japan, Germany, the Netherlands, the UK and France) into major four Asian economies (China, Korea, India and Singapore).Design/methodology/approach Using one basic and four augmented versions of gravity model technique, the authors tried to examine the determinants of bilateral FDI flows in four major Asian economies. The study used World Development Indicators, CEPII, KOF and Heritage Foundation data for period 2001–2012.Findings The results revealed that besides the market size for host and source country, other criteria such as distance, common language and common border also influence foreign investors. Other macroeconomic factors such as inflation rate and real interest rate are among the key factors that attract more FDI. In addition to economic factors, institutional and infrastructural factors such as telecommunication, degree of openness, index of globalisation and index of economic freedom also stimulate the international investors from the developed world to the major Asian countries.Research limitations/implications It is altogether possible that only a set of home country specific characteristics or host country specific characteristics does not matter when determining FDI. Most empirical studies using indices such as the index of globalisation and economic freedom are subject to certain methodological limitations such as model selection, parameter heterogeneity, outliers and moral hazard.Practical implications More distance between the host and source country would result in less FDI flows due to more managerial and raw material supply chain cost. Similarly, more gross domestic product (GDP) and per capita income (PCI) are leading to more FDI flows into Asian economics. Therefore, major Asian economies should frame their economic policies in such a manner where these counties can strengthen their GDP as well as PCI. Furthermore, above countries should open its economy more and more for better FDI flows as it seems that economic globalisation and economic freedom are major determinants of bilateral FDI flows. The negative impact of inflation and interest rate should be controlled.Social implications From policy perspective, higher scores of economic, social and political globalisation also attract high FDI to the host country. On the same line higher scores in economic freedom mean that less restrictions in terms of economic policies and the policy environment are conducive for free trade and resource transfers. Higher scores in trade freedom, investment freedom and freedom from corruptions also show more developed and conducive policy environment. In the same reasoning higher scores in the composite index of economic freedom which takes information from trade freedom, investment freedom and freedom from corruption and others also encourage flow of FDI in to the host country.Originality/value This is the first paper which combines the globalisation index, economic freedom index and distance along with some major macroeconomic variables. [ABSTRACT FROM AUTHOR]

Purpose – This paper aims to analyze how financial system turmoil affected unemployment in industrial countries during the period 1982 to 2003. Design/methodology/approach – The paper uses annual data on 17 industrial countries. It employs the International Monetary Fund's financial stress index and a large number of controls. Findings – The paper finds that, during the sample period, financial market turmoil had only moderate adverse effects on unemployment. Stress in the banking sector and stress in foreign exchange markets were particularly likely to increase unemployment, although the relevant effects were modest too. Turmoil in securities markets affected unemployment only slightly. The results are robust to variations in specification. Originality/value – While previous papers only look at a small number of banking crises, this paper's sample includes crises in all major areas of the financial sector. Furthermore, whereas previous papers cover only major crises, it additionally takes both minor crises and periods of relative calm into account. Finally, this paper is the first to statistically control for the impact of all major determinants of labor market performance. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this paper is to investigate both linear and/or nonlinear effects of inflation on income inequality and to test the Kuznets hypothesis using panel data of 24 developed countries (DCs) and 66 developing countries (LDCs) observed over the period of 1990–2014. Design/methodology/approach: This paper explores the short- and long-run Granger causality relationship between inflation and income inequality using the Toda and Yamamoto (1995) procedure and a Vector Error Correction Model (VECM) approach. The existence of a nonlinear relationship between inflation and income inequality is confirmed implying as inflation rises income inequality decreases. Income inequality then reaches a minimum and then starts rising again. The findings of this paper show the existence of Kuznets "U-shaped" hypothesis between income inequality and real GDP per capita in DCs group, and the existence of Kuznets' inverted "U-shaped" hypothesis for LDCs group. Findings: The results indicate that there is no bi-directional Granger causality between inflation and income inequality in the short-run, but, there is bi-directional Granger causality in the long-run for both the DCs and LDCs group. The results help us to assess the effectiveness of monetary policy in reducing income inequality in both the DCs and LDCs group. As a policy implication, monetary policy is often aimed at controlling the annual rate of inflation in the long-run with a short-run focus on reducing output gaps and creating employment. However, managing inflation may have implications for income inequality. Originality/value: This is original research paper which analyzes the "U-shaped" and inverted "U-shaped" paths of income inequality and real GDP per capita for large sample of two group countries including developed and developing countries, respectively. Also, this paper analyzes the nonlinear relationship between inflation and income inequality in two groups. Furthermore, this paper investigates the short- and long-run relationship between variables. The results are important for policy makers. [ABSTRACT FROM AUTHOR]

Purpose – The purpose of this paper is to examine the relationship between economic growth, foreign direct investment (FDI) and corruption. Design/methodology/approach – Data for 42 developing countries and 28 developed countries is analyzed using panel dynamic ordinary least squares. Findings – FDI has a significant influence on economic growth in both the short run and the long run for developing and developed countries. In the cases of the developing economies, lower levels of corruption enhance the impact that FDI has on economic growth. Originality/value – The study links corruption to the impact of FDI on economic growth. [ABSTRACT FROM AUTHOR]

Purpose — Using quarterly data for a sample of 17 industrial countries, the purpose of this paper is to study asymmetry in the face of monetary shocks compared to government spending shocks. Design/methodology/approach — The paper outlines demand and supply channels determining the asymmetric effects of monetary and fiscal policies. The time-series model is presented and an analysis of the difference in the asymmetric effects of monetary and fiscal shocks within countries is presented. There then follows an investigation of the relevance of demand and supply conditions to the asymmetric effects of monetary and fiscal shocks. The implications of asymmetry are contrasted across countries. Findings — Fluctuations in real output growth, price inflation, wage inflation, and real wage growth vary with respect to anticipated and unanticipated shifts to the money supply, government spending, and the energy price. The asymmetric flexibility of prices appears a major factor in differentiating the expansionary and contractionary effects of fiscal and monetary shocks. Higher price inflation, relative to deflation, exacerbates output contraction, relative to expansion, in the face of monetary shocks. In contrast, larger price deflation, relative to inflation, moderates output contraction, relative to expansion in the face of government spending shocks. The growth of output and the real wage decreases, on average, in the face of monetary variability in many countries. Moreover, the growth of real output and the real wage increases, on average, in the face of government spending variability in many countries. Asymmetry differentiates the effects of monetary and government spending shocks within and across countries. The degree and direction of asymmetry provide a new dimension to differentiate between monetary and fiscal tools in the design of stabilization policies. Originality/value — The paper's evidence sheds light on the validity of theoretical models explaining asymmetry in the effects of demand-side stabilization policies. Moreover, the evidence should alert policy makers to the need to relax structural and institutional constraints to maximize the benefits of stabilization policies and minimize the adverse effects on economic variables. [ABSTRACT FROM AUTHOR]

Purpose The purpose of this paper is to investigate the nonlinear relationship between shadow economy and income inequality and determine whether the size of shadow economy can influence the level of income inequality.Design/methodology/approach Both parametric (panel OLS) and nonparametric/semiparametric regression suggested by Robinson (1988) will be used to capture the dynamic nonlinear relationship between these variables using unbalanced panel data of 154 countries from 2000 to 2007. Additionally, the relationship between income inequality and shadow economy on both developed and developing countries will be analyzed and compared.Findings First, semiparametric analysis and nonparametric analysis are significantly different than parametric analysis and better in nonlinear analysis between income inequality and shadow economy. Second, income inequality and shadow economy resemble an inverted-N relationship. Third, the relationship between income inequality and shadow economy is different in developed countries (OECD countries) and developing countries, where OECD countries have similar inverted-N relationship as before. However, for developing countries, income inequality and shadow economy show an inverted-U relationship, similar to the original Kuznets hypothesis.Practical implications This study suggests that there is a possible trade-off between income inequality and shadow economy and helps policy makers in solving both problems effectively.Originality/value Despite the growing importance of income inequality and shadow economy, literature linking the two variables is scarce. To the best of the authors’ knowledge, there is no literature that nonlinearly links these two variables. Furthermore, the dynamics of the relationship between these two variables in developed countries and developing countries will be explored as well. [ABSTRACT FROM AUTHOR]

Purpose: This study examines the non-linear impact of financial development on income inequality and analyses the mediators through which financial development affects income inequality. Design/methodology/approach: The study uses a dynamic panel threshold method with an endogeneous threshold variable on a comprehensive sample of 85 countries over the period of 1996-2015. Findings: The author finds that financial development activities increase income inequality in developed countries. However, financial development promotes income equality in developing countries. Further, the study finds that education and institutional quality are the channels through which financial development has non-linear impacts on income inequality. Originality/value: The study explores relatively new method to examine the nonlinear impact of financial development and also considers new dataset for the main explanatory variable. [ABSTRACT FROM AUTHOR]

Purpose - The purpose of this paper is to critically review the literature to assess the relevance of the S-shaped model of family labor supply for industrialized countries. Design/methodology/approach - Studies use a wide variety of methodologies and therefore are not readily comparable, but instead they cover a wide range of relevant factors such as historical trends, fringe benefits and home mortgages, ethnic differences, farm labor, low-income households, child care, the impact of welfare benefits, and the problem of the measurement of work hours. Findings - In spite of welfare systems that blur somewhat the predicted income effect at lower wage levels (forward falling segment primarily for women), this model appears to still bear some relevance for these countries, in particular in the face of declining real wages. Families have generally moved up higher along that curve, with less differentiated gender roles, women's stronger labor force attachment, and assortative mating of educated women. Originality/value - The model is mostly relevant for LDCs and has far-reaching practical consequences, while the review highlights the complexity of labor supply in industrialized countries. [ABSTRACT FROM AUTHOR]

Purpose – Using quarterly data for a sample of 17 industrial countries, the purpose of this paper is to study asymmetry in the face of monetary shocks compared to government spending shocks. Design/methodology/approach – The paper outlines demand and supply channels determining the asymmetric effects of monetary and fiscal policies. The time-series model is presented and an analysis of the difference in the asymmetric effects of monetary and fiscal shocks within countries is presented. There then follows an investigation of the relevance of demand and supply conditions to the asymmetric effects of monetary and fiscal shocks. The implications of asymmetry are contrasted across countries. Findings – Fluctuations in real output growth, price inflation, wage inflation, and real wage growth vary with respect to anticipated and unanticipated shifts to the money supply, government spending, and the energy price. The asymmetric flexibility of prices appears a major factor in differentiating the expansionary and contractionary effects of fiscal and monetary shocks. Higher price inflation, relative to deflation, exacerbates output contraction, relative to expansion, in the face of monetary shocks. In contrast, larger price deflation, relative to inflation, moderates output contraction, relative to expansion in the face of government spending shocks. The growth of output and the real wage decreases, on average, in the face of monetary variability in many countries. Moreover, the growth of real output and the real wage increases, on average, in the face of government spending variability in many countries. Asymmetry differentiates the effects of monetary and government spending shocks within and across countries. The degree and direction of asymmetry provide a new dimension to differentiate between monetary and fiscal tools in the design of stabilization policies. Originality/value – The paper's evidence sheds light on the validity of theoretical models explaining asymmetry in the effects of demand-side stabilization policies. Moreover, the evidence should alert policy makers to the need to relax structural and institutional constraints to maximize the benefits of stabilization policies and minimize the adverse effects on economic variables. [ABSTRACT FROM AUTHOR]

Purpose: Individuals' health is considered one of the major determinants of higher levels of productivity and economic development. Over the past century, the widespread occurrence of human immunodeficiency virus/acquired immunodeficiency syndrome (HIV/AIDS) has been a serious threat to economic development around the globe and has caused a dramatic fall in the life expectancy rate in many nations. This is the first study that examines the impact of HIV prevalence on health expenditure at the national level employing two linear and nonlinear autoregressive distributed lag (ARDL) models and simultaneously tests the long-run and short-run relationship for five selected developed countries. The authors employ annual data from 1981 to 2016. They find that HIV prevalence has a significant impact on health expenditure in the short-run and long-run in all five countries using the linear model and four of the countries in the nonlinear model. They find that HIV/AIDS prevalence has a significant short-run and long-run asymmetric impact on health expenditure of almost all selected developed economies. Design/methodology/approach: The authors are employing two linear and nonlinear ARDL models and simultaneously test the long-run and short-run relationship for five selected developed countries. Findings: The authors find that HIV/AIDS prevalence has a significant short-run and long-run asymmetric impact on health expenditure of almost all selected developed economies. Originality/value: To the best of the authors' knowledge, this is the first research work that empirically examines the link between HIV prevalence and health expenditure for this group of countries using linear and nonlinear ARDL approach for short run and long run. [ABSTRACT FROM AUTHOR]

Purpose – The paper aims to study the relationship between economic growth, nuclear energy consumption and carbon dioxide (CO2) emissions for a panel of 25 countries over a period of 1993-2010. Through this study, the author has provided an insight into one of the available sources of energy, i.e. nuclear energy and its impact on economic growth and CO2 emissions. Design/methodology/approach – Separate panels are created for developing and developed economies. Short- and long-run causalities between the variables are established using error correction mechanism. Findings – For the developed countries, short-run causality running from CO2 emissions to economic growth was estimated, whereas strong form of causality indicated the dependence of CO2 emissions on economic growth and nuclear energy consumption was seen to impact CO2 emissions. For the developing countries, both the short-run and strong-form causality estimates indicate that economic growth causes CO2 emissions. Practical implications – On policy front, developing countries can safely adopt CO2 cut-back policies as they are not found to impact economic growth. For the developed countries, such policies may impede growth in the short run, but in the long run these policies do not affect the economic growth. Originality/value – Keeping in mind the significance of nuclear energy consumption in economic growth and less/no GHG emissions generated by nuclear energy, this study validates its significance. This study, to the best of the author's knowledge, considers the largest panel (i.e. 25 countries) to date and the only study that focuses on studying three different panels (complete dataset, developed countries, developing countries) in one study and applies the vector error correction mechanism to study the causal relationship between nuclear energy consumption, CO2 emissions and economic growth. [ABSTRACT FROM AUTHOR]

Purpose: This study examines the effect of general trust (GT) and confidence in banks (CIB) on bank risk-taking. Besides, it explores the moderating role of CIB on the relationship between GT and bank risk-taking. Design/methodology/approach: Secondary data was obtained from the World Value Survey, World Bank and BankFocus from 2011 to 2018. Two-step system GMM estimator was used to examine the links between the GT and CIB with bank risk-taking in MENA region. Findings: Results indicated that both GT and CIB negatively influenced bank risk-taking. Moreover, CIB weakened the negative relationship between GT and bank risk-taking. However, the results were different for MENA region as compared to the full sample. Originality/value: The studies on the link between trust and bank risk-taking are either carried out on an international sample or using a developed economies sample. However, the authors believe that developing economies might exhibit different relationships due to cultural and structural differences present in developed countries. Besides, the authors believe that testing the moderating effect of CIB could shed more light on the differences between developing and developed countries. [ABSTRACT FROM AUTHOR]

Purpose: The purpose of this study is to examine whether the elasticity of substitution (ES) varies between developed and developing countries. Design/methodology/approach: The author derives the growth regressions from the Solow model under the constant elasticity of substitution production function by using the first-order Taylor series expansion and estimate them for each country group classified based on time-varying behavior of income per worker using the data-driven algorithm. Findings: The ES is not unitary and varies among country groups. Developed countries generally have a higher ES than developing countries. Originality/value: For the first time, the author uses the first-order Taylor series expansion to linearize the steady-state value of income per worker, as the author considers this approach to be relatively more straight-forward and tractable. Furthermore, the author estimates the equations using both cross-section and panel data techniques and employs the data-driven algorithm proposed by Phillips and Sul (2007) to classify countries. [ABSTRACT FROM AUTHOR]

Purpose – The aim of this study is to investigate the validity of the Kaldor-Verdoorn's law in explaining the long-run determinants of the labor productivity growth for the manufacturing sector of some developed economies (Western European Countries, Australia, Canada, Japan and the USA). Design/methodology/approach – The authors consider the period 1973-2006 using data provided by the European Commission – Economics and Financial Affairs. The method is instrumental variable. The robustness of estimates is checked by means of the Chow and the CUSUM and CUSUMQ tests. The authors consider the traditional specification of the dynamic Verdoorn law and the one which also includes investment to output ratio (I/Y), as a proxy of the capital growth rate, and the average labor cost growth, as a proxy of supply factors. Findings – The findings suggest that the law is valid for the manufacturing as countries show increasing returns to scale. Capital growth and labor cost growth do not appear important in explaining productivity growth. The estimated Verdoorn coefficients are found to be substantially stable throughout the period. Originality/value – The authors consider the most recent years, which has been characterized by a constant decline in the average GDP growth rates; a productivity growth decline; the long-term reduction in the manufacturing share of total employment. The authors examine the importance of alternative hypotheses such as those related to the existence of supply constraints. The authors check the stability of the KVL throughout the period under the consideration and across countries. The authors evaluate whether, in the case of the developed countries, economies of scale are significant. [ABSTRACT FROM AUTHOR]

Purpose – This study aims to examine the stationarity characteristics of per capita GDP of 17 Asian countries and subpanels for South Asia, East Asia, and high income Asian countries in nonlinear framework. Design/methodology/approach – The authors employed a recently developed nonlinear panel unit root test suggested by Ucar and Omaga in PESTAR framework for full panel and the subpanels. Findings – The results indicate that per capita GDP for the full panel of Asian countries and panel of South Asian countries are linear nonstationary, whereas for the panel of East Asia and high income developed countries have a nonlinear data generating process and are stationary. Originality/value – The use of newly developed nonlinear panel unit root test for Asian countries is the main contribution of the study. In that aspect, this is the first study to employ such a test in this area. [ABSTRACT FROM AUTHOR]