Review of Economic Analysis <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> Research Centre for Economic Analysis en-US Review of Economic Analysis 1973-3909 <p>The Review of Economic Analysis is committed to the open exchange of ideas and information.&nbsp;<br><br>Unlike traditional print journals which require the author to relinquish copyright to the publisher, The Review of Economic Analysis requires that authors release their work under Creative Commons Attribution Non-Commercial license. This license allows anyone to copy, distribute and transmit the work provided the use is non-commercial and appropriate attribution is given.&nbsp;<br><br><a href="">A 'human-readable' summary of the licence is&nbsp;here</a> and t<a href="">he full legal text is&nbsp;here</a>.</p> Special issue: ICEA Public Policy Lesson conference, part of the After the Pandemic Conference Series <p>The Covid-19 Pandemic has been a singular event that affected health, economic situation and social cohesion around the world.</p> <p>The International Centre for Economic Analysis (ICEA), has organized the <strong>After the Pandemic Conference Series</strong>. The conferences in the series are devoted to analyzing various aspects of the pandemic and their long-term consequences. Conference participants were offered the opportunity to submit their papers to the <em>Review of Economic Analysis</em>, which is the official journal of the ICEA.</p> <p>The papers in this special issue (or their earlier versions) were presented at the Public Policy Lessons Conference, the third conference in the series, which was held online Nov 12-13, 2021. The program of the conference can be found <a href="">here.</a></p> <p>The list of conferences, and details, is on the ICEA website, <a href=""></a>.</p> Jerzy (Jurek) Konieczny Copyright (c) 2021 Jerzy (Jurek) Konieczny 2022-01-24 2022-01-24 14 1 1 2 The Economic Consequences of R = 1: Towards a Workable Behavioural Epidemiological Model of Pandemics <p>This paper reviews the literature on incorporating behavioural elements into epidemiological models of pandemics. While modelling behaviour by forward-looking rational agents can provide some insight into the time paths of pandemics, the non-stationary nature of Susceptible-Infected-Removed (SIR) models of viral spread makes characterisation of resulting equilibria difficult. Here I posit a shortcut that can be deployed to allow for a tractable equilibrium model of pandemics with intuitive comparative statics and also a clear prediction that effective reproduction numbers (that is, R) will tend towards 1 in equilibrium. This motivates taking R = 1 as an equilibrium starting point for analyses of pandemics with behavioural agents. The implications of this for the analysis of widespread testing, tracing, isolation and mask-use is discussed.</p> Joshua S. Gans Copyright (c) 2022 Joshua S. Gans 2022-01-24 2022-01-24 14 1 3 25 The political economy of the next pandemic <p>While the pandemic and recovery unfold in real time, this article investigates some of the major themes on preparations for the next pandemic. Humanity cannot rely on modern medicine to beat the next ‘disease X’ and the world cannot afford the extortionate health and economic policy interventions during the COVID-19 pandemic again. From the COVID-19 pandemic we learned that the international economic organizations suffered from disaster myopia and that the self-image of the advanced economies is distorted. It also has become apparent that ‘beggar-thy-neighbor’ health care was generally practiced while global health care should have been the norm. A discussion on the related issues of rationing, triage and scarcity of health care during a pandemic is urgently needed. All in all, a major global investment project is necessary to reduce the vulnerability to and impact of pandemics. As inequalities to a large extent determine pandemic vulnerability and adjustment of SDGs is necessary.</p> Peter A.G. van Bergeijk Copyright (c) 2022 Peter A.G. van Bergeijk 2022-01-24 2022-01-24 14 1 27 49 Ethnic Inequality and Anti-authoritarianism in Sub-Saharan Africa <p>Is ethnic inequality associated with aversion to authoritarian regimes and increase support for democracy as a means of influencing redistribution? Using four rounds of Afrobarometer panel data, covering 29 African countries and 353 distinct ethnic groups, and an ordered logistic model, we show that a rise in Between-ethnic inequality (BGI) is associated with an increase support for anti-authoritarianism and that its effects strengthen as Within-ethnic inequality (WGI) decreases. We &nbsp;find that individuals most strongly support democracy when ethnic identity is reinforced by economic inequality. We also show that support for a change of regime is reinforced when some ethnic groups believe they are politically excluded from government.</p> Karim Nchare Moses Ogeny Copyright (c) 2022 Karim Nchare, Moses Ogeny 2022-01-24 2022-01-24 14 1 51 69 Public health shock, intervention policies, and health behaviors: Evidence from COVID-19 <p>In response to the COVID-19 pandemic, many countries, including the U.S., adopted intervention policies aimed at averting the spread. However, these policies may have led to significant changes in public health behaviors. We use Google search queries to examine how state government actions are associated with people’s internet searches (internet browsing habits) related to health behaviors. We employ the differences-in-differences method to determine the link between disease outbreak, associated intervention policies, and changes in health behavior related searches. Our findings show that school closures, restaurant restrictions, and stay-at-home orders lead to a significant rise in searches for workout, physical activity, exercise, takeout, liquor, and wine. Moreover, people’s concerns regarding weight loss, diet, nutrition, restaurant, and fast food substantially decline following stay-at-home orders. Our event-study results indicate that changes in health behaviors began weeks before stay-at-home orders were implemented contemporaneously with emergency declarations and other partial closures. These findings suggest that people’s health behaviors are notably affected by state government’s intervention policies.</p> Samira Hasanzadeh Modjgan Alishahi Copyright (c) 2022 Samira Hasanzadeh, Modjgan Alishahi 2022-01-24 2022-01-24 14 1 71 88 The Impact of Enterprise Zones on the Incubation and Evolution of Technology and Manufacturing Businesses in New York State <p>This analysis empirically evaluates the effectiveness of entrepreneurial policies using the number and distribution of firms as outcome variables.&nbsp; The analysis occurs within the context of a natural experiment: the START-UP NY program. Implemented in 2014, START-UP NY created enterprise development zones adjacent to publicly supported universities (i.e., SUNY and CUNY campuses) within the state. New business start-ups operating within these zones, and within a specific set of technology and health-related industries received tax incentives that substantially lowered tax rates for a 5-10 year period. In 2016, the State of New York substantially altered its corporate tax structure; a policy initiative affecting firms, business owners, and households in the state simultaneously, and may also induce entrepreneurship. The results suggest that START-UP NY had a positive effect on the growth of New York's micro and small-sized firms operating in professional, scientific, and technical industries. START-UP NY also negatively affected micro-sized manufacturing firms, while positively affecting small manufacturing firms. The latter finding suggests that START-UP NY is effective in incubating micro-sized manufacturing firms that eventually grow into small manufacturing firms.</p> Hal Wesley Snarr Dan Friesner Copyright (c) 2021 Hal Wesley Snarr, Dan Friesner 2022-01-24 2022-01-24 14 1 10.15353/rea.v13i3.3510 Role of Social Media in Socioeconomic Development: Case of Facebook <p>To study the role of Information and Communication Technology (ICT) on countries’ socioeconomic development, the paper investigates the case of Facebook penetration on improving their standing as measured via GNI per capita PPP (Gross National Income per capita based on purchasing power parity). We use four macro factors categories (political, economic, demographic, and technological) in addition to Facebook penetration per capita in order to measure the potential influence of various factors on the socioeconomic level of countries. While the analyses of ICT effect on development has been the focus of many papers in the past, the specific analysis of social media is scarce. Compared to previous studies investigating social media role, we use a large dataset covering all classes of countries and examine holistically many types of determinants using different models. In addition, we distinguish our paper using the economic classification of countries according to the World Bank. Our study indicates that Facebook penetration has a significant positive role on the socioeconomic level of countries, but such role varies depending on the countries’ classification level. Besides, there is a decreasing marginal effect showing the importance for policy makers to assess the complex dynamic behind the characteristic of each country.</p> Nawel Amrouche Moez Hababou Copyright (c) 2021 Nawel Amrouche, Moez Hababou 2022-01-24 2022-01-24 14 1 10.15353/rea.v13i3.4054 The Nexus between Causal Macroeconomic Relations in Japan <p>Japan achieved phenomenal economic growth after WWII. Starting in the early 1990s, however, the Japanese economy began experiencing a prolonged deflation-stagnation period widely known as the “Lost Decades”. Based on data from the World Bank and the Federal Reserve Bank of Saint Louis, this paper employs an autoregressive distributed lags (ARDL) model to find evidence of a long run relation among the real GDP, real imports, the real exchange rate, and the public debt-to-GDP ratio for Japan. Once cointegration is established with the Bounds Test, Granger Causality tests are performed by employing an estimated Vector Autoregressive (VAR) model with the same variables. The empirical results support Granger causality in all directions. In particular, we found real imports and public debt-to-GDP ratio to directly cause real GDP. Interestingly, the real exchange rate causes real GDP indirectly via imports. The public debt had a negative effect on GDP but did not wreak havoc on the Japanese economy. The study also examines whether former Prime Minister Shinzō Abe’s unprecedented macroeconomic policies and structural reforms launched in 2013, known as Abenomics, are pulling Japan out of its economic doldrums.</p> George K Zestos Yixiao Jiang Ryan Patnode Copyright (c) 2021 George K Zestos, Yixiao Jiang, Ryan Patnode 2022-01-24 2022-01-24 14 1 Foreign Direct Investment and the Robustness of Host-Country Commitment <p>This paper presents a model of a forward-looking government wooing foreign direct investment by enacting policies that reflect its commitment to the foreign enterprise. The ease with which the government is able to spend or carry out economic reform to complement the foreign venture evolves over time and influences the likelihood of its sustained commitment. The domestic and external strength of the government, the stability and not necessarily the level of returns from the project, venture-specificity of government spending or reform, and public and elite attitudes toward foreign commercial entry determine how invested the government remains in the long term success of the enterprise. More committed governments tend to be stronger and prefer robust investor-regime relationships. Reform that is not designed too narrowly to favor the investor is also less likely to be reversed later. Like pro-FDI public sentiment, a noisy policy environment induces deeper government commitment.</p> Shaikh Shahnawaz Copyright (c) 2021 Shaikh Shahnawaz 2022-01-24 2022-01-24 14 1 The (non) impact of education on marital dissolution <p>Despite the relevant role attributed to education on marital outcomes, literature does not show a generalized consensus regarding a positive or negative effect from education on marital decisions. In this paper the impact of education on marriage dissolution is analysed exploiting a change in the length of compulsory education in Mexico in 1993 as an instrument for education. The federal government increased compulsory education from completion of primary school, sixth grade, to completion of secondary school, ninth grade, at a national level. In the first part of the analysis, the probit models reveal that education is significant and negatively related to the probability of marital breakdown. An additional year of education is associated with a decrease between 0.6 and 0.9 percentage points in the probability of marital disruption for the 2002-2012 period. However, the results using the instrumental variables methodology indicate that an additional year of schooling has no effect on the probability of marriage dissolution. This finding demonstrates that the relationship between education and divorce is not causal and suggests that although higher levels of education are an undeniable trait observed in non-broken marriages, it is not education by itself one of the mechanisms leading to better marriage outcomes.</p> Edith Aguirre Copyright (c) 2021 Edith Aguirre 2022-01-24 2022-01-24 14 1 Demand for Money in Greece After Euro Area and Policy Uncertainties <p>This study examines the asymmetric effects of uncertainties in monetary policy on the demand for money in Greece. In doing so, it introduces and uses the monetary policy uncertainty (MPU) index, which can probably be a very appropriate and robust explanatory variable in <em>demand-for-money</em> <em>models</em>. Therefore, this study with this index differs from previous empirical studies that use conventional uncertainty-based independent variables. Empirical findings of both models indicate that changes in the MPU index have significant effects on Greek money demand. Additionally, compendious inferences of the nonlinear model for the Greek people’s financial preferences are as follow as: (<em>i</em>): <em>Greek people invest more in alternative financial instruments and/or spend their money rather than hold (demand) it when the </em><em>MPU</em> <em>index rises,</em> (<em>ii</em>): <em>Greek people’s money demand in both increases and decreases in </em><em>the</em> <em>MPU</em> <em>index is predominantly determined by longer-term bond rate changes. </em></p> Serdar Ongan Ismet Gocer Copyright (c) 2022 Serdar Ongan, Ismet Gocer 2022-01-24 2022-01-24 14 1 Will the Widespread Use of Cashless Payments Reduce the Frequency of the Use of Cash Payments? <p>Will the widespread use of cashless payments reduce the frequency of the use of cash payments? This question is important because the major costs of cash use are fixed costs that would only be reduced if the frequency of cash payments substantially decreased, and thus the extent of the reduction of the cost of cash use depends on the frequency of cash use after the widespread use of cashless payment methods. Using the data from the Financial Literacy Survey 2019 in Japan, this paper shows that the frequency of cash use for those who use both cash and noncash payment methods and that of those who exclusively use cash are about once in 2.3 days and about once in 2 days, respectively, and thus there is only a slight difference. The result did not change even if a regression model for cash usage was used that considers the endogenous choice of payment methods or if counterfactual simulations of the decrease in consumers’ willingness to use cash were conducted. The results suggest that the benefit of reducing the cost of cash use due to the widespread use of cashless payment methods is overestimated because the frequency of the use of cash payments is unlikely to decrease despite the use of cashless payment methods.</p> Hiroshi Fujiki Copyright (c) 2021 Hiroshi Fujiki 2022-01-24 2022-01-24 14 1 89 120 10.15353/rea.v13i3.4522 Economic Policy Uncertainty and the Co-Movement between REITs and Exchange Rate <p>The REITs market has attracted a lot of interest among the academic, policymakers, and market participants. The linkages between REITs and macroeconomic and financial variables have been adequately explored in the literature, with more emphasis on linear models. This study expands the frontier of knowledge by examining the role of uncertainty in the comovement/spillover between REITs and the currency markets. Some interesting results were observed. First, using the Diebold and Yilmaz (2012) spillover test, we find that there is strong connectedness between the REITs and currency markets. Second, the BDS test shows that nonlinearity is a very crucial factor to be put into consideration when examining the role of EPU in affecting the interactions between REITs and exchange rate markets. Third, the non-parametric causality-in-quantile test confirms that the connectedness between the markets and EPU is stronger around the lower and middle quantiles. These results have important policy implications for policymakers and market participants. The study also offers suggestions for future research.</p> Ibrahim Raheem Ismail O. Fasanya Agboola H. Yusuf Copyright (c) 2021 Ibrahim Raheem, Ismail O. Fasanya 2022-01-24 2022-01-24 14 1 121 141 10.15353/rea.v13i3.3564 Macro-Financial Parameters Influencing Bitcoin Prices: Evidence from Symmetric and Asymmetric ARDL Models <p>Bitcoins are evolving as a modern class of investment assets and it is crucial for investors to manage their investment risk. This paper examines the impact of macroeconomic-financial indicators on Bitcoin price using symmetric and asymmetric version of autoregressive distributed lag (ARDL) models with structural breaks. The asymmetric long-run association ascertained between Bitcoin prices and the macroeconomic-financial indicators is evident. Our empirical results indicate that the Bitcoin cannot be used to hedge against the inflation, Federal funds rate, stock markets and commodity markets. We further find that Bitcoin can be regarded as a hedging device for the oil prices. Our findings have significant implications for market participants who consider including alternate investment assets in their portfolios.</p> Srinivasan Palamalai Bipasha Maity Krishna Kumar Copyright (c) 2021 Srinivasan Palamalai, Bipasha Maity, Krishna Kumar 2022-01-24 2022-01-24 14 1 143 175 10.15353/rea.v13i3.3585