This paper sheds light on the relationship between economic complexity and income inequality considering the role of institutions based on data over the period 1996–2020 across 52 developed and developing countries from Europe and Central Asia, and the Middle East and North Africa. Our contribution to the existing literature is twofold. First, we analyse the relationship between economic complexity and income inequality considering the institutional dimension and studying various components of institutions. Second, we take into account the non-linear form of relationship between economic complexity and income inequality, as well as het erogeneity of this relationship across groups of countries. We address endogeneity by employing a fixed effect two stage least squares model with instrumental variables. Our results demonstrate that for the overall sample of countries, an increase in a country’s economic complexity results in higher level of income inequality. However, the impact of economic complexity on income inequality is heterogeneous across groups of countries, with a U-inverted relationship in countries of Europe and Central Asia. Moreover, economic complexity combined with the high level of institutional quality can reduce income inequality. Therefore, we conclude that the improvement of all components of institutional structure will facilitate a decrease in income disparities. Our analysis shows that better educational level leads to lower income inequality. Besides, our findings emphasise the need for policy ensuring more equal gains from economic development and international trade.
The global financial crisis triggered a debate on the pros and cons of using macroprudential policy as a prudential control tool that includes capital reserves or requirements to address systemic risk, financial credit cycles, and macroeconomic stabilization objectives. The macroprudential policy has now been established as an area of financial policy to stop excessive risk-taking in the financial sector and reduce its consequences to the real economy in response to the lessons learned from the global financial crisis. Controlling credit risk also requires a government-run fiscal sector, one of which is controlling corruption. Corruption significantly affects credit risk. This study aims to examine the effectiveness of macroprudential policy instruments and the role of institutional instruments in controlling commercial bank credit risk in the Asia Pacific region from 2012 to 2023. This study uses the generalized method of moments (GMM) as an analytical tool. The results show that loan-to-value and corruption significantly affect credit risk in Asia Pacific.
This study investigates changes in the expenditure on out-of-home food and alcohol during the COVID-19 pandemic. Our research specifically explores intergroup variations among households, taking into account the dissimilarity of Russian regions in light of the degree of quarantine restrictions enforced. To test the research hypotheses, we use microdata from the Household Budget Survey conducted by the Federal State Statistics Service. To compare the expenditures on out-of-home food and alcohol in regions with soft, medium, and hard restrictive measures, we employ t-test for comparing means and the Kolmogorov – Smirnov test forcomparing distributions. The Tobit model is applied to compare different social groups' household spending habits. The joint analysis of out-of-home food and al cohol expenditure enables the separation of involuntary savings from coping strategies using models for censored data, thereby facilitating an in-depth assessment of household well-being in the face of shocks. Our findings show a reduction in out-of-home food expenditure across all social groups and all levels of quarantine restrictions. The share of alcohol expenditure decreased in almost all social groups in regions with soft measures but significantly increased in those with medium and hard restrictions.
A considerable amount of work has shown that a carbon tax combined with research subsidies may be regarded as effective policy for encouraging the spread of low-carbon technologies for the benefit of society. This paper exploits the macro economic approach of endogenous growth models with technological change in order to make a comparative assessment of the impact of such policy measures on economic growth in the US and Japan in the medium and long term. Our estimates with the micro and macro data reveal similarities among Japanese and US energy firms as regards the elasticity of the innovation production function in R&D expenditure and the probability of radical innovation. However, according to energy patent statistics, clean innovation is not as wide-spread in Japan as it is in the US. This may explain our quantitative findings of the need for a stronger reliance on a carbon tax in Japan as opposed to the US.
