Review of Economic Analysis 2021-07-11T11:28:38-04:00 Jerzy (Jurek) Konieczny Open Journal Systems <p><em>Review of Economic Analysis</em> is an open access, peer reviewed economic journal. We are committed to open exchange of ideas and information. Unlike many open-access journals, we charge neither submission nor publication fees. We aim to become a leading general interest journal. We accept submissions from all fields of economics and offer rigorous refereeing process and wide dissemination.</p> <p>Papers published in open access journals are read and cited more and have greater impact than those published in fee-based journals.</p> <p>We are the official journal of the International Centre for Economic Analysis (</p> Secular stagnation and Google Trends – can we find out what people think? 2021-06-28T17:19:35-04:00 Katarzyna Schmidt Mateusz Gajtkowski <p>The main aim of the study was to verify the thesis that the US economy is measured against the spectre of secular stagnation by determining the mood of American society using Google Trends. While performing the analysis, the authors used data on the American market for the years 2004-2018. The study comprised 42 entries, including 19 entries from the category “social” and 23 entries from the category “financial”. The analyses do not allow for a clear statement that the US economy is facing the spectre of secular stagnation, but they allow us to formulate the observation that the mood of the society is moderately pessimistic, which undoubtedly translates into economic activity and may be the cause of the persisting economic stagnation.</p> 2021-02-08T00:00:00-05:00 Copyright (c) 2021 Katarzyna Schmidt A Pure Bureaucratic-Entrepreneurial Theory of Deposit Insurance Adoption 2021-06-28T17:19:35-04:00 Kam Hon Chu <p>Based on Becker, Kane, Niskanen, and Peltzman’s ideas, we develop a model to explain why deposit insurance is adopted even though policymakers are aware of its pitfalls in both theory and practice. In our model, the regulator acts as both a bureaucrat and an entrepreneur to maximize his self-interest through administering a deposit insurance scheme. The theory postulates that adoption of deposit insurance is more likely under the following conditions: the scheme is (i) publicly administered and (ii) privately funded, with (iii) non-risk rated insurance premium and (iv) compulsory membership; and there is (v) a larger deposit market with (vi) at least two groups of banks (good vs. bad), (vii) lower government ownership of banks, and (viii) higher economic freedom, such that one group exerts its political influence and gains from deposit insurance. Empirically our theory is supported by the stylized facts, cross-country binary-choice regression results and a case study of Canada.</p> 2021-02-15T00:00:00-05:00 Copyright (c) 2021 Kam Hon Chu Structural Funds and Regional Economic Growth: the Greek experience 2021-06-28T17:19:35-04:00 Adamantia Kehagia Foteini Kyriazi <p>The impact of structural funds of the European Union (EU) on regional economic growth is a matter of both political and economic importance. The large and regular payments made across the EU to countries and regions within them were and are meant to promote various aspects of growth and development and to encourage structural changes that foster investments and economic reforms. But how much of these aims have they been achieved? In this paper we provide considerable empirical evidence that Greek regions have, for the most part, benefited by the various disbursements of EU structural funds. We shed partial light on where this funding went to and to how it potentially contributed to Greek growth but we also raise a number of questions about the viability of the current productive structure of the Greek economy and its over-reliance on tourism. Our results provide support on the efficacy of the payments but leave open the problem of where these payments should be allocated, the monitoring of their absorption and the end impact in the economic cycle within a country.</p> 2021-03-24T00:00:00-04:00 Copyright (c) 2021 FOTEINI KYRIAZI Real Estate Bubbles and Contagion: Evidence from Selected European Countries 2021-06-28T17:19:35-04:00 Jean-Louis Bago Imad Rherrad Koffi Akakpo Ernest Ouédraogo <p>Using quarterly housing price-to-rent ratios from 1970 to 2018, this paper investigated the presence of real estate bubbles at a national level in eight selected European countries, namely Belgium, France, Germany, Italy, the Netherlands, Portugal, Spain, and the United Kingdom. Then, we analyzed bubbles contagion among these countries. We applied the generalized sup ADF test developed by Phillips et al. (2015) to detect explosive behavior in house prices. Subsequently, we implemented the non-parametric model with time varying coefficients developed by Greenaway-McGrevy and Phillips (2016) to estimate bubbles contagion among European real estate markets. We found evidence of at least one historical bubble in all these countries, with Germany, the Netherlands, Portugal, and Spain currently experiencing a rising bubble. The results also suggest that bubbles are contagious between these real estate markets.</p> 2021-03-24T00:00:00-04:00 Copyright (c) 2021 Jean-Louis Bago, Imad Rherrad, Koffi Akakpo, Ernest Ouédraogo Productivity Convergence and Divergence in Latin America, 1970-2014 2021-06-28T17:19:35-04:00 Christos Kollias Panayiotis Tzeremes Nickolaos G. Tzeremes <p>The paper examines Latin American countries’ productivity growth levels and their convergence patterns utilizing nonparametric frontier approaches. Utilizing a sample of 17 Latin American countries for the period 1970-2014 it estimates various productivity indexes alongside with their main components. Moreover a convergence analysis is conducted estimating relative productivity convergence paths. The results suggest that over the period examined, countries’ productivity growth levels have contracted. We provide evidence that the implementation of the structural reforms of the 1990s do not appear to have driven Latin American countries to higher productivity levels. Moreover, the results do not render support to the productivity convergence hypothesis. On the other hand, some support was found for countries’ technological change levels, identifying three convergence clubs.</p> 2021-03-24T00:00:00-04:00 Copyright (c) 2021 Christos Kollias, Panayiotis Tzeremes, Nickolaos G. Tzeremes Stock Market Investment and Inflation: Evidence from the United States and Canada 2021-06-29T15:34:46-04:00 Janesh Sami <p>This paper examines the long-run relationship between goods prices and stock prices to understand whether stock market investment can help hedge against inflation in the United States (US) and Canada. This study employed an autoregressive distributed lag (ARDL) cointegration test developed by Pesaran, Shin, and Smith (2001), and finds evidence of a positive long-run economic relationship between stock prices and goods prices in both economies over the sample period 1960 to 2019. The long-run elasticity is above one for both economies implying that the developments in the goods market significantly affect the stock market. We undertake a suite of sensitivity checks and find robust evidence that the stock market investment can help hedge against inflation in the United States and Canada.</p> 2021-06-29T00:00:00-04:00 Copyright (c) 2021 Janesh Sami Can foreign ownership reduce bank risk? Evidence from Vietnam 2021-07-06T17:27:54-04:00 Tu DQ Le <p>This study investigates the impact of foreign ownership on bank risk in Vietnam between 2006 and 2015. Our findings show that foreign ownership can lower bank risk, suggesting that the State Bank of Vietnam should further remove restrictions on foreign investments in the banking system. The findings also indicate that higher bank risk is associated with greater technical efficiency, suggesting that the skimping-cost hypothesis may exist. The same conclusion is true for large banks, for banks with higher liquid assets and those with greater loan growth. Also, the findings demonstrate that assets diversity may reduce bank risk, suggesting that Vietnamese banks should diversify their assets from loans towards derivatives and other earning assets to improve banks’ stability. Finally, our findings demonstrate that a less concentrated market can lower bank risk, suggesting that the future mergers and acquisitions in Vietnam that involve a state-owned commercial bank should be approached with caution.</p> 2021-06-30T00:00:00-04:00 Copyright (c) 2021 Tu DQ Le Do distributional preferences reverse on a dollar? An experiment 2021-07-11T11:28:38-04:00 Marlon Williams <p>In settings where <em>other-regarding</em> motives are likely to be (and some would argue, <em>should be</em>) at the forefront of our minds, how much of our behavior can still be explained by narrow pecuniary self-interest by itself? In an experiment where subjects are asked to vote between two income distributions that have diametrically opposed effects on the group as a whole, I find that self-interest still appears to dwarf the combined effects of other-regarding motives in influencing the votes of the vast majority of subjects.</p> 2021-07-11T00:00:00-04:00 Copyright (c) 2021 Marlon Williams Cultural Assimilation: Learning and Sorting 2021-06-28T17:19:35-04:00 Stein Monteiro <p>immigrants have greater exposure to co-ethnics, leading to fewer incentives to learn the local culture and assimilate. In this paper, the exposure channel through which source country richness affects assimilating immigration is modelled through neighbourhood location choices and incentives to learn the local culture in the host country. Two equilibrium outcomes are identified, in which, there is either only assimilating immigration in at least one neighbourhood of the host country (sorting equilibrium) when immigration is from a rich source country, or there is some non-assimilating immigration in all neighbourhoods (mixed equilibrium) when immigration is from a poor source country. The presence of this exposure channel is tested using data from the Longitudinal Survey of Immigrants in Canada: waves 1-3. Learning, rather than sorting into co-ethnic communities, is the main factor operating in the exposure channel between source country richness and assimilating immigration.</p> 2021-06-28T00:00:00-04:00 Copyright (c) 2021 Stein Monteiro Factors that affect Students’ performance in Science: An application using Gini-BMA methodology in PISA 2015 dataset 2021-06-28T17:19:35-04:00 Anastasia Dimiski <p>Existing theoretical and empirical evidence on the determinants of students’ performance reveals a direct link between pre-primary education and achievement test scores in primary school. Relying on the first-of-its-kind 2015 wave data from the Programme of International Student Assessment (PISA), the present study analyses the associations between students’ performance in science and a broad set of variables, including regressors that proxy pre-primary education. Employing a Gini Regression Bayesian Model Averaging (BMA) approach to account for model uncertainty, it is found that non-attendance in pre-primary education is a robust determinant with a negative impact on students’ performance in science. This result is confirmed both under Gini-BMA and OLS-BMA methodology.</p> 2021-06-28T00:00:00-04:00 Copyright (c) Import Tariffs and Informal Labour Market: A Computable General Equilibrium (CGE) Analysis for Turkey 2021-06-28T17:19:35-04:00 Hale Akbulut Hüseyin Taylan Eğen <p>From the 1980s to onwards trade liberalization policies have been widely used in many countries. This process has significant impacts on many economic aspects one of which is on the labour market.&nbsp; However, the direction of the relationship between trade reforms and the labour market is controversial. This study aims to analyse the effects of a specific trade reform of import tariff changes on the formal and informal labour market for Turkey. For that purpose, we benefit from Computable General Equilibrium (CGE) Model that relies on nonlinear simultaneous equations. We construct an updated Social Accounting Matrix (SAM) which is compatible with our model. Our findings indicate that while there is a positive relationship between formal labour employment in total and import tariff rates, the negative relationship occurs between informal employment and tariff rates.</p> 2021-06-28T00:00:00-04:00 Copyright (c) 2021 Hale Akbulut, Hüseyin Taylan Eğen Necessity and Opportunity Entrepreneurship in Canada 2021-06-28T17:19:35-04:00 Florence Neymotin <p>The present analysis examines the initiation of necessity and opportunity entrepreneurship ventures in Canada from the late 1980s until more recent times, to determine how these activities relate with the business cycle. The definitions of necessity and opportunity entrepreneurship mirror those in Fairlie and Fossen (2018). Unlike previous results for other countries, I find that in Canada, both necessity and opportunity entrepreneurship appear to be procyclical, with new ventures increasing as unemployment declines. These results hold after various robustness tests, including gender stratification are applied. The possibility of using these forms of entrepreneurship as leading or lagged indicators of recessions is also considered.</p> 2021-06-28T00:00:00-04:00 Copyright (c) 2021 Florence Neymotin