contagion macroeconomic models with multiple equilibria abstract several concepts of contagion are distinguished it is argued that models that allow only a single equilibrium conditional on the macroeconomic fundamentals are not adequate to capture all forms of contagion hence it is useful to formulate macro models that admit multiple equilibria and self fulfilling expectations a simple balance of payments model is presented to illustrate that phenomenon and some back of the envelope calculations assess its relevance to the coincidence of emerging market crises in 1994 95 and in 1997

rational panics and stock market crashes abstract this paper offers an explanation for stock market crashes which focuses on the role of rational but uninformed traders we show that uninformed traders can precipitate a price crash because as prices decline they surmise that informed traders received negative information which leads them to reduce their demand for assets and drive the price of stocks even lower the model yields several implications such as that crashes can occur even when the fundamentals are strong and that the magnitude of the crash depends on the fraction of uninformed investors and the amount of unsophisticated passive investing present in the market

financial development and energy consumption evidence from a heterogeneous panel of asian countries abstract this paper examined relationships between financial development and energy consumption in asia for the period of 1980 2012 for the purpose of the empirical analysis it performed the heterogeneous panel causality test suggested by dumitrescu and hurlin 1 the findings of the panel cointegration test indicated that there was a long run equilibrium relationship between finance and energy consumption in the region moreover the heterogeneous panel causality test detected a unidirectional causality from energy consumption to financial development but not vice versa these results indicate that an expansion of energy usage could be a driving force behind financial development in asia

the nexus between financial development and energy consumption in the eu a dynamic panel data analysis abstract the relationship between financial development and energy consumption has newly started to be discussed in energy economics literature this paper investigates this issue in the eu over the period 1990 2011 by using system gmm model no significant relationship is found in the eu27 the empirical results however provide strong evidence of the impact of the financial development on energy consumption in the old members greater financial development leads to an increase in energy consumption regardless of whether financial development stems from banking sector or stock market by contrast we find for the new members that the impact of financial development on energy consumption depends on how financial development is measured using bankindex the impact of financial development displays an inverted u shaped pattern while no significant relationship is detected once it is measured using stockindex

financial factors and investment in belgium france germany and the united kingdom a comparison using company panel data we construct company panel data sets for manufacturing firms in belgium france germany and the united kingdom covering the period 1978 1989 these data sets are used to estimate empirical investment equations and to investigate the role played by financial factors in each country a robust finding is that cash flow and profits terms appear to be both statistically and quantitatively more significant in the united kingdom than in the three continental european countries this is consistent with the suggestion that financial constraints on investment may be relatively severe in the more market oriented u k financial system

stock markets banks and growth panel evidence this paper investigates the impact of stock markets and banks on economic growth using a panel data set for the period 1976 98 and applying recent gmm techniques developed for dynamic panels on balance we find that stock markets and banks positively influence economic growth and these findings are not due to potential biases induced by simultaneity omitted variables or unobserved country specific effects

on the nexus of financial development economic growth and energy consumption in china new perspective from a gmm panel var approach abstract this paper studies the endogenous relationships among financial development energy consumption and economic growth in china by applying a gmm panel var approach with a panel data of 30 chinese provinces over the period 1996q1 2015q4 financial development is measured by six individual indicators and by a comprehensive indicator obtained through the pca method we also account for regional heterogeneity by dividing our sample into three regions eastern region central region and western region we underline our findings in three aspects first financial development measured by most individual indicators m2 credit revenue of the insurance industry and stock market value and the comprehensive one has a significantly negative impact on economic growth second energy consumption can significantly contribute to economic growth in all regions while no feedback effect is found except in the western region this result is further supported by the granger causality tests last financial development in the sense of m2 credit stock turnover and the comprehensive indicator can significantly lessen energy consumption in all regions but this inhibitory effect is found to be largest in the western region followed by the eastern region and be smallest in the central region the granger causality tests confirm further the existence of heterogeneity across regions a bidirectional granger causality between the two variables is found in the eastern region a unidirectional granger causality running from energy consumption to financial development is identified in the central region and no significant causal relationship shows up in the western region our findings provide valuable policy implications for china heading for a green economic growth

regime switching effect of financial development on energy intensity evidence from markov switching vector error correction model abstract studies that deal with financial development and energy intensity usually show the single effect of one variable on another or the causality running between them during the whole sample period but this study is an attempt to explore the regime switching effect of financial development on energy intensity in different periods within the sample using yearly data from 1972 to 2017 in case of bangladesh a markov switching vector error correction model is applied to carry out the study and the results reveal a two regime switching nature of the effect of financial development on energy intensity financial development plays a stimulating role in regime 1 where it plays an inhibiting role in regime 2 to influence energy intensity the duration of regime 1 is longer than that of regime 2 specifying that the promoting effect of financial development on energy intensity is more enduring than the inhibiting effect in bangladesh the results have important policy implications to formulate energy policy and to maintain a balance between financial development and energy intensity in bangladesh and other emerging nations

estimating the environment kuznets curve hypothesis evidence from latin america and the caribbean countries this study explores the effect of economic growth gdp renewable energy consumption re and financial development fd on co2 emission co2 in latin america and caribbean countries to achieve this goal a panel co2 model was built over the period 1980 2010 the kao cointegration test results revealed that the variables are cointegrated the fully modified ols fmols results indicated an inverted u shape relationship between co2 and gdp thus confirming the environmental kuznets curve hypothesis furthermore fmols results also revealed that fd can improve environmental quality by its negative long run effect on co2 however re has no long run effect on co2 indicating that the re does not contribute to co2 reduction the vecm granger causality results revealed feedback causality between gdp re fd and co2 in both short and long run additionally granger causality results also revealed that re gdp and fd can be a good solution to reduce environmental damage since they have a causal effect on co2 this study shows the investigated countries should increase their banking loans on green energy energy efficiency and energy saving projects to reduce environmental damage in addition the above recommendation can increase the contribution of renewable energy in reducing environmental damage

natural gas trade and sustainable growth empirical evidence from the top gas consumers of the developing world abstractnatural gas is the key non renewable source of energy for a low carbon economy the research applies heterogeneous panel techniques to investigate the impact of natural gas consumption on economic growth across a panel of top 15 natural gas consumers of the developing world we establish long run dynamics with cross sectional dependence and heterogeneity across the sample countries the long run output elasticities suggest that the natural gas consumption and trade variables have significant positive effect on the output in a panel of developing economies further we establish feedback relationship among gas consumption output and trade in the short run given the significance of natural gas as the low emission source of energy we suggest governments and policy advisers of these major natural gas consumers to focus on developing pipeline infrastructure for adequate supply reforming natural gas sector with a competitive price structure to combat excess demand in individual natural gas market w

financial development and energy consumption is the mena region different abstract this paper examines the relationship between financial development and energy consumption estimations in the major mena countries algeria bahrain egypt iran iraq israel jordan kuwait lebanon libya morocco oman qatar saudi arabia syria tunisia united arab emirates and yemen over the period 1996 to 2014 we consider the energy use in kg of oil equivalent per capita as a dependent variable that reflects the cross country energy consumption we measure the level of financial development in the mena countries by considering banking indicators extending the model of sadorsky 2011 we estimate both linear and non linear dynamic panel model we use new robust econometrics to take into account heterogeneity and nonlinearity and we control the estimation results for the period of the global financial crisis the results of the study report a positive and statistically significant relationship between the intermediation capacity of the banking system as well as its size and energy consumption the findings also confirm a non linear and inverted u shaped relationship between financial development and energy demand for the mena region this implies that initially energy demand increases with financial development and then at a turning point of financial development it declines the policy implications of these results are discussed

opening a stock exchange abstract a large body of theoretical and empirical literature has established a positive relationship between levels of stock market development and economic growth however previous empirical work has been based on samples of approximately 40 countries with the most highly developed financial systems since 1950 over 70 countries have opened their first national stock exchanges can such exchanges increase economic growth i present a data set of my construction that describes the exchange openings that occurred between 1960 and 1998 and find that these exchanges have generated increases in growth during their first 5 years of existence although the longer term results are ambiguous

impact of financial development on trade embodied carbon dioxide emissions evidence from 30 provinces in china abstract the literature on financial development and carbon dioxide co2 emissions is extensive however previous studies have not found the impact of financial development on trade embodied co2 emissions therefore we build a dynamic panel model based on the extension of the stirpat model to verify the overall and indirect impact of financial development we calculate trade embodied co2 emissions of 30 provinces in china in 2000 2014 using the single region input output model srio by eliminating the impact of imported intermediate products on co2 emissions embodied in exports exc in order to measure financial development in china more comprehensively we use financial scale development financial efficiency and financialization to define it results show that the environmental kuznets curve is confirmed at the level of china s provinces in most provinces exc began to increase in 2006 and decline in 2010 but co2 embodied in net exports ec began to decrease in 2005 and increase in 2010 the results of overall impact indicate that different financial development indicators have different effects on ec but they all reduce exc the results of indirect impact through imitation innovation ic and independent research and development rd find that financial scale development increases exc however financial efficiency and financialization decreases exc financial scale development and financial efficiency can decrease ec but financialization increases ec the results of indirect impact through fdi show that financial scale development and financial efficiency can decrease exc and ec financialization decreases exc but the impact of financialization on ec has obvious threshold characteristics when the level of financialization is lower than the threshold value financialization will reduce ec there is regional heterogeneity in the impact of financial development on trade embodied co2 emissions the conclusions of this paper are of great reference value for improving the level of financial development so as to realize the development of china s green trade

rational asset price movements without news this paper argues that an important part of movements in asset prices may be caused by neither external news nor irrationality but by the revelation of information by the trading process itself two models are developed that illustrate this general idea one model is based on investor uncertainty about the quality of other investors information the other is based on dispersion of information and small costs to trading the analysis is used to suggest a possible rational explanation of the october 1987 crash copyright 1993 by american economic association

rational herding in financial economics abstract this paper briefly describes recent papers on the economics of rational herding in financial markets some models can predict perfect herding in which rational agents all act alike without any countervailing force such herding typically arises either from direct payoff externalities negative externalities in bank runs positive externalities in the generation of trading liquidity or in information acquisition principal agent problems based on managerial desire to protect or signal reputation or informational learning cascades the paper also provides a few pointers to related literature and suggests issues to be addressed in future research

does fdi influence renewable energy consumption an analysis of sectoral fdi impact on renewable and non renewable industrial energy consumption this study examines the link between foreign direct investment fdi and energy demand fdi is a source of financing that allows businesses to grow at the same time fdi can be a source of innovation that promotes energy efficiency existing evidence on the impact of aggregate fdi inflows on energy consumption is scarce and inconclusive in the current study we disaggregate fdi inflows into mining manufacturing total services and financial services components and examine the impact of these fdi flows on renewable and non renewable industrial energy sources for 74 countries for the period 1985 2012 we employ a blundell bond dynamic panel estimator to control for endogeneity and omitted variable biases in our panels the results point broadly to an energy consumption reducing effect with respect to non renewable sources of energy and an energy consumption augmenting effects with respect to renewable energy we find that these effects vary in magnitude and significance by sectoral fdi

financial development and energy consumption in central and eastern european frontier economies this study examines the impact of financial development on energy consumption in a sample of 9 central and eastern european frontier economies several different measures of financial development are examined including bank related variables and stock market variables the empirical results obtained from dynamic panel demand models show a positive and statistically significant relationship between financial development and energy consumption when financial development is measured using banking variables like deposit money bank assets to gdp financial system deposits to gdp or liquid liabilities to gdp of the three stock market variables investigated only one stock market turnover has a positive and statistically significant impact on energy consumption both short run and long run elasticities are presented the implications of these results for energy policy are discussed

switching towards coal or renewable energy the effects of financial capital on energy transitions abstract does a country s stock of financial capital affect its ability to achieve energy transitions this paper uses data for up to 137 countries for the period 1998 2013 to investigate the importance of financial capital for changes in the use of each energy type i find that financial capital supports transition to more capital intensive energy types for high income countries financial capital facilitates transitions from fossil fuels to modern renewable energy sources especially wind both private credit from banks and domestic private debt securities support greater shares of wind energy for lower income countries financial capital supports progression from biomass towards fossil fuel energy sources such as coal i also find that countries with larger stocks of financial capital are more likely to move to more capital intensive electricity generation systems

do economic financial and institutional developments matter for environmental degradation evidence from transitional economies abstract several studies have examined the relationship between environmental degradation and economic growth however most of them did not take into account financial developments and institutional quality moreover stern stern d 2004 the rise and fall of the environmental kuznets curve world development 32 8 1419 1439 noted that there are important econometric weaknesses in the earlier studies such as endogeneity heteroscedasticity omitted variables etc the purpose of this paper is to fill this gap in the literature by investigating the linkage between not only economic development and environmental quality but also financial development and institutional quality we employ the standard reduced form modelling approach to control for country specific unobserved heterogeneity and gmm estimation to control for endogeneity our study considers 24 transition economies and panel data for 1993 2004 our results support the ekc hypothesis while confirming the importance of both institutional quality and financial development for environmental performance we also found that financial liberalization may be harmful for environmental quality if it is not accomplished in a strong institutional framework

quality signals in information cascades and the dynamics of the distribution of motion picture box office revenues abstract the movies are an ideal testing ground for information cascade models one can observe the dynamics of box office revenues from the opening to the end of the run to study the possibility that information cascades occur in the movies one has to incorporate the fact that agents can observe box office revenues as reported on the evening news and communicate word of mouth information about the quality of the movies they have seen one must consider many movies rather than the mere two choices assumed in information cascade models we develop an agent based model of information cascades with these extensions our objective is to see if the conclusions of information cascade models hold with these extensions they do not and to see if the agent based model can capture the features of the motion picture box office revenues it does

financial development investment and economic growth zhenhui xu in this article i use a multivari ate vector autoregressive var approach to examine the effects of permanent financial development on domestic investment and output in 41 countries between 1960 and 1993 the var approach permits the identification of the long term cumulative effects of financial development on the domestic variables by allowing for dynamic interactions among these variables the results reject the hypothesis that financial development simply follows economic growth and has very little effect on it instead there is strong evidence that financial development is important to growth and that investment is an important channel through which financial development affects growth jel e22 e44 e47 016 057 keywords economic growth financial development investment vector auto regression impulse response i introduction interest in the relationship between financial development and economic growth dates back to early this century and has been growing since the 1980s 1 in the literature three views have emerged concerning the potential importance of finance in economic growth the first sees finance as a critical element of growth schumpeter 19113 goldsmith 19691 mckinnon 19733 shaw 1973 fry 1978 1988 bencivenga and smith 1991 king and levine 1993a 1993b in this view services provided by the financial system are essential for growth and a repressed financial system characterized by price distortion undersaving negative or unstable returns on savings and investment and inefficient allocation of savings among competing users impedes growth 2 as the financial system develops households substitute out of unproductive tangible assets raising the total real supply of credit the quantity and quality of investment and thus the rate of economic growth in addition financial development can pro mote technological innovations and productivity growth king and levine 1993a the second view regards finance as a relatively unimportant factor in growth essentially as the handmaiden to industry and commerce robinson 19521 lucas 1988 stern 1989 in this perspective the lack of financial development is simply a manifestation of the lack of demand for financial services as the real sectors of the economy grow the demand for various financial services rises and will thus be met by the financial sector based on this view financial development simply follows economic growth and has very little effect on it like the first one the third view ascribes effects to finance but focuses on its potential negative impacts on growth van wijnbergen 1983 buffie 1984 economists holding this view contend that financial development can hinder growth by reducing available credit to domestic firms this situation arises from the presence of informal curb markets as the formal financial system develops households are seen to substitute out of curb market loans thus reducing the total real supply of domestic credit the reduction in the supply of credit can lead to a credit crunch thereby lowering investment and slowing production and growth further such a credit crunch can retard economic growth beyond the short term by lowering the steady state capital stock wijnbergen 1983 from these divergent views three testable hypotheses emerge with sharply different policy implications the first view suggests that government policies should be directed toward improving the financial system since financial development has important causal effects on growth the second view implies that government policies toward improving the financial system will have little effect on growth since financial development results from growth and has little impact on it based on the third view there is a potential danger of financial development under certain institutional arrangements government efforts toward financial development can cost an economy its long term growth by reducing total real supply of domestic credit

energy consumption in china and underlying factors in a changing landscape empirical evidence since the reform period abstract in recent decades the phenomenal growth in the chinese economy has created increasing energy consumption this is the first study analysing energy consumption in china considering economic social and political dimensions of globalisation along with the effects from trade and financial sectors the time period covers the full trajectory since the start of economic reform until recent times in this respect we use the konjunkturforschungsstelle kof globalisation index to explore the dynamic link between economic growth financial development trade and various dimensions of globalisation and energy consumption modern time series econometric techniques are used in establishing stationarity long run dynamics and causality of the series the findings suggest that globalisation decreases energy consumption in the short run but increases it in the long run however the effect of financial development on energy consumption in china is opposite to the globalisation effect on energy consumption granger causality reveals a feedback effect between economic globalisation and financial development globalisation in china can only reduce energy consumption if china develops its financial sector to a greater extent in future china should invest in its financial sector and low carbon energy alternatives to achieve sustainable development prevention of energy shortfalls and cleaner environment would assist in bridging the gap both from social and political aspects to ensure china benefits significantly with high economic growth in this asian century

applied econometrics and implications for energy economics research abstract developments in applied econometrics particularly with regard to unit root tests and cointegration tests have motivated a rich empirical literature on energy economics over the last decade this study reviews recent developments in time series econometrics applications in the energy economics literature we first consider the literature on the integration properties of energy variables we begin with a discussion of the implications of whether energy variables contain a unit root and proceed to examine how results differ according to the specific unit root or stationarity test employed we then proceed to examine recent developments in the literature on cointegration granger causality and long run estimates between disaggregated energy consumption and economic growth we review both single country and panel studies and pay particular attention to studies which have expanded the literature through adding variables such as financial development and trade in addition to energy consumption to the augmented production function as well as studies which have extended the literature through examining disaggregated energy consumption by type in each case we highlight best practice in the literature point to limitations in the literature including econometric modeling challenges and suggest recommendations for future research a key message of our survey is that the profession needs to guard against overload of research in these areas as most applied studies are no longer adding anything more to what is already known

financial development and economic growth convergence or divergence abstract this study tests for convergence in financial development and economic growth by incorporating the interaction between the real and financial sectors into an otherwise traditional test for convergence the results show strong evidence for conditional convergence middle and high income countries conditionally converge to parallel growth paths not only in per capita gdp but also in financial development the mutually reinforcing relationship between financial development and economic growth is stronger in the early stage of economic development and this relationship diminishes as sustained economic growth gets under way as such low income countries with a relatively well developed financial sector are more likely to catch up to their middle and high income counterparts and those with a relatively under developed financial sector are more likely to be trapped in poverty this finding explains the observed great divergence between poor and rich countries another finding is that while human capital is more important to growth in the early stage of economic development economic freedom becomes more important in the later stage

how does financial development affect energy consumption evidence from 21 transitional countries abstract financial development significantly impacts energy consumption this paper uses cross country panel data from 21 transitional countries for the period 2006 2015 while considering different financial development indicators and nonlinear relationships between financial development and energy consumption this is done by selecting five financial development indicators to measure financial development and testing linear and nonlinear relationships between financial development and energy consumption it found the following first there are no significant linear relationships between financial development and energy consumption financial development does have significant nonlinear impacts on energy consumption in transitional countries with estimated nonlinear parameters that are significant second financial development affects energy consumption in transitional countries in differing ways financial intermediation development positively affected energy consumption in all the countries studied stock markets development led decreased energy consumption in china and poland financial openness development reduced energy use except in georgia and the kygyz republic

dynamic co movements of stock market returns implied volatility and policy uncertainty we examine time varying correlations among stock market returns implied volatility and policy uncertainty our findings suggest that correlations are indeed time varying and sensitive to oil demand shocks and us recessions

energy consumption and economic growth evidence from the commonwealth of independent states abstract this study examines the relationship between energy consumption and economic growth for eleven countries of the commonwealth of independent states over the period 1991 2005 within a multivariate panel data framework based on pedroni 1999 pedroni 2004 heterogeneous panel cointegration test and corresponding error correction model cointegration is present between real gdp energy consumption real gross fixed capital formation and labor force with the respective coefficients positive and statistically significant the results of the error correction model reveal the presence of unidirectional causality from energy consumption to economic growth in the short run while bidirectional causality between energy consumption and economic growth in the long run thus the results lend support for the feedback hypothesis associated with the relationship between energy consumption and economic growth

market crashes and informational avalanches this paper analyses a security market with transaction costs and a sequential trading structure transaction costs may prevent many traders from revealing their private information if they trade in a sequential fashion due to the information aggregation failure hidden information gets accumulated in the market which may be revealed by a small trigger yielding a high volatility in the absence of an accompanying event the paper first characterizes the optimal trading strategy of the agent which constitute the unique equilibrium further properties of the price sequence are obtained using the concepts of informational cascade and informational avalanche the results are applied to the explanation of market crashes in particular the dynamics of market crashes are illustrated as evolving through the following four phases 1 boom 2 euphoria 3 trigger and 4 panic where the euphoria corresponds to the informational cascade and the panic corresponds to the informational avalanche

decomposition analysis of debt s impact on china s energy consumption abstract debt can influence the energy consumption of private sectors and public agencies by changing their fiscal budget constraints from 1996 to 2016 china has had rapid debt growth and become the second largest borrower in the world additionally china has been the largest energy consumer since 2009 the impact of debt growth on its energy consumption however is not much addressed in the literature using an extended lmdi model we investigate the impact of china s debt on its energy consumption from 1996 to 2016 in a new way the results show that 1 among the closed set of debt related factors and other conventional variables studied private debt per capita makes the strongest contribution to china s energy consumption and population has a moderate impact on the growth of energy consumption 2 energy efficiency improvement output efficiency of government debt debt structure adjustment and increased tertiary industry share are mitigating forces of energy consumption these results provide a new holistic perspective for the chinese government to formulate synergistic policies of risk control and pollution control

an analysis of the implications for stock and futures price volatility of program trading and dynamic hedging strategies the notion that a real security is redundant when it can be synthesized by a dynamic trading strategy ignores the informati onal role of real securities markets portfolio insurance uses a dyna mic strategy to synthesize a european put the absence of trading in an appropriate real put option prevents the transmittal of informatio n to market participants about the future price volatility associated with current dynamic hedging strategies less information is transmi tted to potential liquidity providers it will therefore be more di fficult for the market to absorb the trades implied by the dynamic he dging strategies and the stocks future price volatility will rise copyright 1988 by the university of chicago

financial development and economic growth abstract this paper examines the empirical relationship between long run growth and financial development proxied by the ratio between bank credit to the private sector and gdp we find that this proxy is positively correlated with growth in a large cross country sample but its impact changes across countries and is negative in a panel data for latin america we argue that the latter findings is the result of financial liberalization in a poor regulatory environment our findings also show that the main channel of transmission from financial development to growth is the efficiency rather than the volume of investment

assessing the design of three carbon trading pilot programs in china abstract to help overcome the challenge of growing co2 emissions china is experimenting with market based instruments including pilot co2 emissions trading systems etss in seven regions that serve as precursors of a national co2 ets implementing an ets in a rapidly growing economy in which government authorities exercise significant control over markets poses many challenges this study assesses how well three of the most developed pilot etss in guangdong shanghai and shenzhen have adapted carbon emissions trading to china s economic and political context we base our study on new information gathered through interviews with local pilot ets regulators and experts analysis of recent trading data and extensive legal and literature reviews we point out instances in which pilot regulators have deftly tailored carbon emissions trading to china s unique context and instances in which designs are insufficient to ensure smooth operation we also indicate areas in which broader institutional reforms of china s political economy may be required for carbon emissions trading to operate successfully we make nine recommendations to improve the design and operation of the pilot programs and to inform the construction of a national co2 ets

foreign direct investment and decoupling between energy and gross domestic product in developing countries on a sample of 20 developing countries we noticed a clear decline in the energy intensity as foreign direct investment increases the reason for that probably is the use of modern technologies that came with foreign direct investment i e a leapfrogging over the old fashioned traditional technologies in use in these countries

the short and long run causality relationship among economic growth energy consumption and financial development evidence from south mediterranean countries smcs abstract this study aims at examining the short run and long run causal link between economic growth energy consumption and financial development by using data set of 6 smcs for the 1995 2015 periods the basic testing procedure requires four steps adf and pp unit root tests bound tests for co integration ardl approach and vecm method the results confirm cointegration between the variables it means that the long run relationship exists the short run causal relationships unidirectional exist at least once for each country except egypt the granger causality results for individual countries give mixed results these results urge for the attention of the policy makers in smcs to design a comprehensive energy conservation policy to minimize the consequences of massive energy consumption on economic growth by adding financial development

a new database on the structure and development of the financial sector this article introduces a new database of indicators of financial structure and financial development across countries and over time the database is unique in that it combines a wide variety of indicators that measure the size activity and efficiency of financial intermediaries and markets it improves on previous efforts by presenting data on the public share of commercial banks introducing indicators of the size and activity of nonbank financial institutions and constructing measures of the size of bond and primary equity markets this article introduces a new database the first to provide comprehensive measures of the development structure and performance of the financial sector this database is the first to define and construct indicators of the size and activity of nonbank financial intermediaries such as insurance companies pension funds and non deposit money banks it is also the first to include indicators of the size of primary equity markets and primary and secondary bond markets in constructing the database authors carefully deflate measures and match stock and flow variables

local discouragement and global collapse a theory of coordination avalanches abstract we study a dynamic game in which all players initially possess the same information and coordinate on a high level of activity eventually players with a long string of bad experiences become inactive this prospect can cause a coordination avalanche in which all activity in the population stops coordination avalanches are part of pareto efficient equilibria they can occur at any point in the game their occurrence does not depend on the true state of nature and allowing players to exchange information may merely hasten their onset we present applications to search markets organizational meltdown and inefficient computer upgrades jel d83

adaptive expectations and stock market crashes a theory is developed that explains how stocks can crash without fundamental news and why crashes are more common than frenzies a crash occurs via the interaction of rational and naive investors naive traders believe that prices follow a random walk with serially correlated volatility their expectations of future volatility are formed adaptively when the market crashes naive traders sell stock in response to the apparent increase in volatility since rational traders are risk averse as well a lower price is needed to clear the market the crash is a self fulfilling prophecy frenzies cannot occur in this model

the asymmetric role of shadow economy in the energy growth nexus in bolivia abstract this paper estimates the energy demand function to examine the asymmetric relationship between the shadow economy and energy consumption in the case of bolivia during the period of 1960 2015 the ambiguous empirical findings on shadow economy energy demand nexus has inclined us to apply the nonlinear ardl cointegration approach developed by shin et al 2014 and the hatemi j 2012 asymmetric causality test the empirical evidence confirms the presence of an asymmetric relationship between the variables of interest positive and negative shocks to official gdp true gdp and the shadow economy have positive impacts on energy consumption energy consumption is positively and negatively affected by positive and negative shocks in financial development respectively a positive negative shock to capital decreases energy consumption another important finding concerns the complex causal direction between economic growth and energy consumption this study provides new insights regarding to the use of official gdp true gdp and the shadow economy as economic tools to maintain energy demand for sustainable economic development

transactions volume and volatility we show that the positive volatility volume relation documented by numerous researchers actually reflects the positive relation between volatility and the number of transactions thus it is the occurrence of transactions per se and not their size that generates volatility trade size has no information beyond that contained in the frequency of transactions our results suggest that theoretical research needs to entertain scenarios in which 1 both the frequency and size of trades are endogenously determined yet 2 the size of trades has no information content beyond that contained in the number of transactions article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

exploring the bi directional long run relationship between energy consumption and life quality abstract this study aims at investigating the bi directional long run relationship for the period of 1990 2009 between energy consumption and life quality in 198 countries categorized by income level to achieve this goal the canonical cointegrating regression ccr was utilized the results revealed that energy consumption improves the life quality of 70 of the countries despite their different incomes the study s results unlike all other previous studies also revealed that the life quality indicators also increase energy consumption a phenomenon that appears to be true in 65 of the countries despite the fact that energy consumption plays an important role in achieving a better life quality the world still depends on fossil fuels which represent 81 of total energy consumption therefore it is suggested that these countries should rationalize their fossil fuel energy consumption by increasing the role of renewable energy and increasing their energy saving to improve life quality without causing any damage to the environment

the impact of energy consumption and co2 emission on the economic and financial development in 19 selected countries abstract this study investigated the impact of energy consumption on the economic and financial development in 19 countries these countries were selected due to the fact that the financial development indicators contribute an important share to their total gdp the panel model was employed taking the period of 1980 to 2008 the results show that energy consumption enables these countries to achieve high economic and financial development however the high development that these countries have achieved in the late three decades increased the co 2 emission it is important that these countries should reduce the level of pollution through utilizing energy protection policies such as rationing energy consumption and controlling carbon dioxide emissions or increasing the share of clean energy of their total energy consumption

how many times again will we examine the energy income nexus using a limited range of traditional econometric tools during the last three decades following closely the developments in econometric theory energy and environmental economists have empirically examined the energy income nexus for different countries and time periods however today in spite of the growing interest in this area the state of knowledge is still controversial and unsettled this viewpoint paper attempts to highlight some of the issues related to the existing literature on the long run relationship and causality between energy consumption and economic growth in particular it discusses how it is difficult to make policy recommendations on the basis of inconsistent and conflicting results in the published literature on the subject in order to do so the paper first illustrates the increasing trend in the number of studies published in this area providing also a brief comparison of the conventional methods used to estimate the energy income nexus it then deals with new directions and different viewpoints on the same issue

re regulating district heating in sweden abstract the electricity market reform in sweden has had great but little discussed consequences for the district heating industry formerly regulated municipal district heating companies are now obliged to operate in a commercial manner and pricing previously regulated by the local authority act is now free the swedish competition authority has on several occasions mentioned to the government that a price regulation ought to be reinstated since district heating is a natural monopoly and in many cases in a dominant market position on local heating markets the competition authority also believes that cross subsidies occur in multi service utilities i e between monopolistic district heating and competitive electricity production and sales municipal district heating is often organised together with electricity sales and production in a municipally owned limited company many municipalities have recently sold their energy utilities to private or state owned commercial actors thus creating private monopolies exempt from price regulations in 1999 the national energy administration stem was given the task to monitor the district heating market and to suggest means to come to terms with these issues stem does not favour a price regulation as the first measure stem also has an operative goal of increasing the use of district heating as a means of reducing electricity dependence in the heating of premises here an interesting conflict of interest exists between the two government authorities we argue that the differences in opinion go beyond the actual tasks given to the authorities but rather depend on perspectives economics and consumer perspective versus an engineering environmental and production perspective we would also like to encourage a broad discussion about the state of district heating and its regulatory condition and that neither economical models nor energy models are taken for granted

environmental degradation in france the effects of fdi financial development and energy innovations abstract this paper explores the determinants of carbon emissions in france by accounting for the significant role played by foreign direct investment fdi financial development economic growth energy consumption and energy research innovations in influencing co 2 emissions function in this endeavour we employ the novel sor shahbaz et al 2017 unit root test on french time series data over the period 1955 2016 to examine the order of integration in the presence of sharp and smooth structural breaks in the variables we also apply the bootstrapping bounds testing approach recently developed by mcnown et al 2018 to investigate the presence of cointegration and the empirical findings underscore the presence of cointegration among the time series moreover we find that fdi has a positive impact while energy research innovations have a negative impact on french carbon emissions financial development lowers carbon emissions thereby improving the french environmental quality fdi degrades the environment and thus supports the pollution haven hypothesis in france similarly financial development suggests that financial stability is a required condition for improving environmental quality so are energy research innovations contrarily energy consumption is positively linked with carbon emissions however the relationship between economic growth and co 2 emissions is an inverted u which is a validation of the environmental kuznets curve ekc

the impact of financial development on energy consumption in emerging economies abstract financial development is often cited as a very important driver of economic growth in emerging economies and it is thus likely that financial development affects energy demand this study uses generalized method of moments estimation techniques to examine the impact of financial development on energy consumption in a sample of emerging countries several different measures of financial development are examined using a panel data set on 22 emerging countries covering the period 1990 2006 the empirical results show a positive and statistically significant relationship between financial development and energy consumption when financial development is measured using stock market variables like stock market capitalization to gdp stock market value traded to gdp and stock market turnover the implications of these results for energy policy are discussed

the effect of foreign direct investment and stock market growth on clean energy use across a panel of emerging market economies this study investigates the impact of both fdi inflows and stock market developments on clean energy use across 20 emerging market economies spanning the period 1991 2012 it accounts for cross sectional dependence and heterogeneity in the analysis and employs robust panel econometric techniques the empirical results on long run elasticities display that economic output fdi inflows and stock market developments have all a significant positive impact on clean energy consumption finally the results on heterogeneous panel non causality tests indicate the presence of unidirectional causality running from fdi to clean energy consumption in the short run for robustness purposes the paper also estimates long run elasticities for individual countries with the findings documenting that both fdi inflows and stock market developments have a considerable positive impact on clean energy uses the findings urge that both policy makers and governments in these emerging market economies should initiate effective public private partnership investments in clean energy projects by providing lucrative incentives which in turn will encourage both domestic and foreign investors to invest more in clean energy projects and eventually moving these economies towards sustainable economic growth

does higher economic and financial development lead to environmental degradation evidence from bric countries abstract a vast number of studies addressed the environmental degradation and economic development but not financial development moreover as argued by stern 2004 the rise and fall of the environmental kuznets curve world development 32 1419 1439 they present important econometric weaknesses using standard reduced form modeling approach and controlling for country specific unobserved heterogeneity we investigate the linkage between not only economic development and environmental quality but also the financial development panel data over period 1992 2004 is used we find that both economic and financial development are determinants of the environmental quality in bric economies we show that higher degree of economic and financial development decreases the environmental degradation our analysis suggests that financial liberalization and openness are essential factors for the co 2 reduction the adoption of policies directed to financial openness and liberalization to attract higher levels of r d related foreign direct investment might reduce the environmental degradation in countries under consideration in addition the robustness check trough the inclusion of us and japan does not alter our main findings

heterogeneity and stability bolster the strong not the weak we first study a stylized model of self fulfilling panic among agents with differing fragilities to strategic risk and show that depending on the severity of coordination problems the panic trigger threshold can depend only on one type s fragility we then present a model of systemic panic among financial institutions with heterogeneous fragilities to financial spillovers concerns about potential spillovers generate strategic interaction triggering a pre emption game in which one tries to exit the market before others to avoid spillovers although financial contagion originates in weaker institutions systemic risk can critically depend on financial health of stronger in the contagion chain in this case bolstering the strong rather than the weak more effectively enhances systemic stability

rational frenzies and crashes most markets clear through a sequence of sales rather than through a walrasian auctioneer because buyers can decide whether to buy now or later rather than only now or never their current willingness to pay is much more sensitive to price than the demand curve is a consequence is that markets will be extremely sensitive to new information leading to both frenzies in which demand feeds on itself and crashes in which price drops discontinuously the paper also shows how a result from static auction theory the revenue equivalence theorem can be applied to solve for a dynamic price path

business as usual market crashes and wisdom after the fact the authors present a three stage model of market dynamics in the first stage routine behavior tends to keep information of common interest trapped in private hands in the second stage private information reaches a threshold that triggers some agents to alter their behavior these actions release information to the market the final stage involves the market s response to this news as other participants react to the initial departure from routine behavior the authors present an application to industry investment they also outline applications to the international debt crisis to bank runs and to political upheavals copyright 1994 by american economic association

what determines the dynamics of absolute excess returns on stock markets abstract in this paper we quantify the dynamics of absolute excess returns on stock markets depending on three factors the average of the absolute excess return the level of the stock price and stock market volatility we also argue that the absolute excess return can be regarded as an empirical measure of the herding behavior of financial investors our empirical results for the german stock index show that the absolute excess return depends significantly on all three factors although volatility may be seen as the strongest factor among them

former soviet union oil production and gdp decline granger causality and the multi cycle hubbert curve abstract this paper discusses the transition of the former soviet union fsu within the context of a 1987 1996 soviet and fsu oil production decline the conventional explanation of the break up is that economic inefficiencies and the cold war defense build up caused it another possible explanation one that is examined at length here is that declining oil production was a contributing factor the econometric analysis suggests that the fall in soviet and former soviet gdp in the 1980s and 1990s did not granger cause the decline in oil production but the decline in oil production did granger cause the fall in gdp coal and natural gas to gdp relationships show alternative granger causalities that we would expect to see with oil but do not a multi cycle hubbert trend that may be used to forecast future fsu oil production is also shown

growth cycles and market crashes abstract market booms are often followed by dramatic falls to explain this requires an asymmetry in the underlying shocks a straightforward model of technological progress generates asymmetries that are also the source of growth cycles assuming a representative consumer we show that the stock market generally rises punctuated by occasional dramatic falls with high risk aversion bad news causes dramatic increases in prices bad news does not correspond to a contraction of existing production possibilities but to a slowdown in its expansion this economy provides a model of endogenous growth cycles in which recoveries and recessions are dictated by the adoption of innovations journal of economic literature classification numbers o40 g12 o41 o30

the role of globalization on the recent evolution of energy demand in india implications for sustainable development using annual data for the period 1971 2012 this study explores the relationship between globalization and energy consumption for india by endogenizing economic growth financial development and urbanization the cointegration test proposed by bayer hanck 2013 is applied to estimate the long run and short run relationships among the variables after confirming the existence of cointegration the overall results from the estimation of an ardl energy demand function reveal that in the long run the acceleration of globalization measured in three dimensions economic social and overall globalization leads to a decline in energy demand in india furthermore while financial development is negatively related to energy consumption economic growth and urbanization are the key factors leading to increased energy demand in the long run these results have policy implications for the sustainable development of india in particular globalization and financial development provide a win win situation for india to increase its economic growth in the long run and become more environmentally sustainable

stock market crashes and dynamics of aftershocks abstract we begin with the intuitive observation that short term business as usual process and bubble rising looks like an accelerated energy before an earthquake in such a framework the aftershocks resemble the correction process of the stock market we investigate the statistical properties of stock returns in the financial markets just after a major market crash it is found that the aftershocks obey the well known gutenberg richter simple rule in geophysics our empirical observations show that the statistical properties of aftershocks sequences in the crashes of late 90s and early 00s are essentially different from the ones observed a decade earlier

market liquidity hedging and crashes in the absence of significant news hedging strategies were blamed for the stock market crash of october 1987 but traditional models cannot explain how a relatively small amount of selling could cause so large a price drop the authors develop a rational expectations model in which prices play an important role in shaping expectations markets are much less liquid in their model than in traditional models discontinuities or crashes can occur even with relatively little hedging the model is consistent with theories as disparate as keynes beauty contest insights and thom s catastrophe analysis and suggests means to reduce volatility copyright 1990 by american economic association

financial development and economic growth views and agenda this critique argues that the preponderance of theoretical reasoning and empirical evidence suggests a positive first order relationship between financial development and economic growth the body of work would push even most skeptics toward the belief that the development of financial markets and institutions is a critical and inextricable part of the growth process and away from the view that the financial system is an inconsequential sideshow responding passively to economic growth many gaps remain however and the paper highlights areas in acute need of additional research

the dynamic links between energy consumption economic growth financial development and trade in china fresh evidence from multivariate framework analysis abstract this study investigates the relationship between energy use and economic growth by incorporating financial development international trade and capital as important factors of production function in case of china over the period of 1971 2011 the ardl bounds testing approach to cointegration was applied to examine long run relationship among the series while stationarity properties of the variables was tested by applying structural break test our empirical evidence confirmed long run relationship among the variables the results showed that energy use financial development capital exports imports and international trade have positive impact on economic growth the granger causality analysis revealed that unidirectional causal relationship running from energy use to economic growth financial development and energy use granger cause each other there is bidirectional causality between international trade and energy use the feedback relation exists between financial development and international trade there is also bidirectional causality exists between capital and energy demand financial development and economic growth and international trade and economic growth this paper makes significant contribution in energy economics and opens up new direction for policy makers to explore new and alternative sources of energy which would be helpful in meeting the rising demand of energy due to sustained rate of economic growth

energy demand and stock market development in oecd countries a panel data analysis abstract this paper investigates the impact of stock market developments on oil and electricity demand of oecd member countries we conduct different panel data methodologies and use annual data ranging from 1996 to 2011 the overall findings substantiate that income real prices size of the stock market and liquidity are important determinants for both oil and electricity demand we also compute long run elasticity coefficients by using a simple partial adjustment model pam and find that the long run elasticity coefficients are larger than the short run parameters moreover our results show that the demand for oil and electricity is inelastic with respect to both own real price and real income over the short run and the long run from a policy making perspective the findings suggest that potential policy tools to reduce energy consumption may not be useful as the demand for energy is inelastic with respect to energy prices our results also manifest that although stock market deepening variables do not have a large effect on energy use as energy price and economic growth have market size and liquidity significantly affect energy consumption therefore energy demand estimations based on solely energy price and income may be inaccurate when some stock market development indicators are excluded the empirical findings of this paper provide further insights for policy makers energy companies and energy economists in terms of demand management policies and pricing decisions

global estimates of energy growth nexus application of seemingly unrelated regressions as the world struggles to emerge from a global recession and financial crisis countries are looking for solutions to improve domestic economic performance and put people back to work global energy demand and prices have been resilient during the recession leading policy makers in countries with the potential to produce energy to look to that sector as a potential engine for economic growth the objective of this study is to undertake an empirical study on linkages among energy consumption economic growth fdi relative price and financial development i e broad money supply m2 in low income middle income high income non oecd high income oecd south africa middle east and north africa mena and the aggregate data of the world over a period of 1975 2011 data is analyzed by the im pesaran shin ips test of unit root to find out the order of integration the long run relationship is investigated through the pedroni 37 test of panel cointegration at last the seemingly unrelated regression sur method is used for estimation of the impact of growth factors on energy consumption in these regions the results reveal that each variable seem to have a unit root at level so we could investigate cointegration of the series at level on the basis of pedroni test we can bring to a close that series are cointegrated the results of seemingly unrelated regression sur suggests that gdp per capita has a positive impact on energy consumption in low income middle income south africa mena and aggregate data of the world however in high income oecd and non oecd regions there is no significant relationship been found in both regions fdi plays a pivotal role in increasing energy demand in middle income high income oecd and non oecd region which implies that whatever other benefits may accrue from fdi it should not be expected to generate sufficient energy in south africa mena and the world directly fdi enhancement policies should be supplemented to stimulate growth in those regions broad money supply exerts positive impact on energy demand in low income middle income high income non oecd and mena regions finally relative prices has either a positive impact i e middle income region and or a negative impact on energy consumption i e low income high income oecd and mena region the results conclude that lower energy prices reduce input costs for nearly all goods and services in the regions thus making them more affordable