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This article analyses the evolution over time of perceived corruption for a large set of countries worldwide. To proxy corruption, we use the recently proposed Bayesian Corruption Index (Standaert, S. (2015). Divining the level of corruption: A bayesian state space approach, Journal of Comparative Economics, 43(3), 782–803). We employ the test developed by (Phillips, P., & Sul, D. (2007). Transition modeling and econometric convergence tests. Econometrica, 75, 1771–1855) that enables the endogenous determination of convergence clubs for countries over time. Having divided countries into convergence clubs, we explore whether each club differs from the others in terms of their competitiveness ranking. In particular, drawing on the 2019 Global Competitiveness Report, we focus not only on the global competitiveness score, but also on the first and the fifth pillars of competitiveness: institutions and health, respectively. Mean and median scores for clubs confirm the general rule that low perceived corruption levels tend to be associated with high-income countries with established democracies, high-quality healthcare systems, and relatively low-income inequality. However, countries such as Spain and Italy, which are innovation-driven economies with excellent scores in the health pillar, are in the worst club for perceived corruption, suggesting there are additional idiosyncratic aspects that could drive perceived corruption levels.

This article provides an estimation method to decompose monetary policy innovations into persistent and transitory components using the nonlinear Taylor rule proposed in Andolfatto, Hendry, and Moran (2008) [Are inflation expectations rational? Journal of Monetary Economics, 55, 406–422]. To use the Kalman filter as the optimal signal extraction technique, we use a convenient reformulation for the state equation by allowing expectations to play a significant role in explaining the future time evolution of monetary shocks. This alternative formulation allows us to perform the maximum likelihood estimation for all the parameters involved in the monetary policy as well as to recover conditional probabilities of regime change. Empirical evidence on the US monetary policy making is provided for the period covering 1986-Q1 to 2021-Q2. We compare our empirical estimates with those obtained based on the particle filter. While both procedures lead to similar quantitative and qualitative findings, our approach has much less computational cost.

In this article, we aim to estimate what the cost of Covid-19 has been in terms of unemployment for Spain. We use a simple autoregressive model to simulate what the unemployment rate would have been without the pandemic and we compare this with the actual values. We also forecast the unemployment rate for 2021 and 2022 to analyse the persistence of the pandemic shock to unemployment.

Although it is not a new phenomenon, in recent years inequality has moved to the top of the political agenda given the concern that will result in political instability and social resentment. Persistence in inequality can further undermine economic growth and development by hindering educational opportunities, human capital formation, and intergenerational mobility. The persistent nature of inequality stands as one of the most serious challenges for the global economy. This paper analyses inequality persistence for a sample of 60 countries from 1984 to 2015. The authors conclude that inequality is persistent and government redistribution polices through taxes and transfers did not significantly reduce inequality persistence.

In this paper we contribute to the long literature on how fiscal policy affects the real economy. In particular, we focus on how government consumption affects private consumption for a pool of European economies. We estimate panel vector error correction models between the two consumption variables for the EU 28 + Norway and Switzerland, for the two periods before and after 2008. The results show that government consumption affects private consumption differently in the periods before and after 2008. This means an increase in government consumption could have a positive impact on private consumption. [ABSTRACT FROM AUTHOR]

In this paper we contribute to the literature on determining the real exchange rate by using models that incorporate structural breaks and nonlinearities. We estimate cointegrated dynamic ordinary least squares regressions and quantile regressions. We find that the estimated coefficients for the EU members from central and eastern Europe are different to those for the other member states. We also find that the models are different before and after the crisis that started in 2008, and this affects the outcome of the long-run equations for the EU15 + Cyprus and Malta. [ABSTRACT FROM AUTHOR]

Economic convergence has long been a declared objective of the EU and has been considered the fundamental mechanism for achieving socioeconomic cohesion. Even so, the empirical literature finds a lack of real convergence as geographical clusters have emerged. In this paper, we contribute to the literature on income convergence in the EU by analysing convergence in real disposable income across European countries. In contrast to the previous results on real convergence in the EU, we find that most of the countries are converging to the same equilibrium level. [ABSTRACT FROM AUTHOR]

The aim of this paper is to shed some light on the issue of the co-movement between residential real estate and commercial real estate using a newly developed database by the Bank if International Settlements. Our results point for the existence of a unique common nonlinear trend in the five countries analysed. [ABSTRACT FROM AUTHOR]

In this paper, we analyse the convergence patterns in inter-regional inequality and income per capita for the Mexican states over the period 1940–2015. To that end, we apply a time-series approach considering temporal and transitional heterogeneity. Results indicate that Mexican states do not converge to the same long-run equilibrium. Instead of overall convergence, we find club convergence for both regional inequality and income per capita. The existence of clubs means that measures aimed at reducing income inequality and promoting regional growth should consider the specific characteristics revealed in the convergence analyses. Furthermore, pro-growth regional policies in Mexico may not necessarily reduce inter-regional income inequality. Income disparities thus need to be specifically addressed through pro-poor regional policies. [ABSTRACT FROM AUTHOR]

The energy consumption-growth nexus has been widely studied in the empirical literature, though results have been inconclusive regarding the direction, or even the existence, of causality. These inconsistent results can be explained by two important limitations of the literature. First, the use of bivariate models, which fail to detect more complex causal relations, or the ad hoc approach to selecting variables in a multivariate framework; and, second, the use of linear causal models, which are unable to capture more complex nonlinear causal relationships. In this paper, we aim to overcome both limitations by analysing the energy consumption-growth nexus using a Flexible Fourier form due to Enders and Jones (2016). The analysis focuses on the US over the period 1949 to 2014. From our results we can conclude that, where the linear methodology supports the neutrality hypothesis (no causality between energy consumption and growth), the Flexible Fourier form points to the existence of causality from energy consumption to growth. This is contrary to the linear analysis, suggesting that lowering energy consumption would adversely affect US economic growth. Thus, by employing the Flexible Fourier form we find the conclusions can be quite different. [ABSTRACT FROM AUTHOR]

Economic convergence has long been a declared objective of the EU and considered the fundamental mechanism for achieving socioeconomic cohesion. The recent economic crisis had an uneven impact across EU countries and brought a halt to the process of economic and social convergence. In response to this situation, the Europe 2020 strategy, launched in 2010, aimed to deliver social and territorial cohesion in the Member States. In this paper we evaluate the poverty and social exclusion pillar of the Europe 2020 strategy by analysing whether it has promoted convergence across the EU countries in the indicators devised to capture risk of poverty, severe material deprivation, and the number of persons living in households with very low work intensity. Our results for all three rates indicate that convergence occurs in heterogeneous clubs that do not follow a geographic east‒west or south‒north pattern. Convergence within each club, especially for the severe deprivation rate, takes place by means of a catching-up process, with Eastern European levels converging on the Western levels. Finally, not only is there club convergence, but there is no tendency for the clubs to convergence. Poverty and social cohesion indicators show a multi-speed Europe, casting doubt on the sustainability of the overall convergence process in the EU. [ABSTRACT FROM AUTHOR]