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> en-US <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> (Jerzy (Jurek) Konieczny) (Jordan Hale) Tue, 20 Dec 2022 18:38:22 -0500 OJS 60 Does Herding Matter in the Chinese Stock Markets? <p>This paper examines the herd behavior in six segmented markets on the Chinese stock markets. Using the OLS, GARCH, Quantile Regression, and State Space Models to examine the daily returns from 2003 to 2018, we find that herd behavior exists widely in all the segmented markets examined in China, particularly in the two B-share markets. The two B-share markets also show stronger (weaker) asymmetric herd effects when market returns are rising (falling) and when trading volumes are higher (lower). Further evidence suggests that the herd effect in China became stronger during the period of the Chinese stock market turbulence. The results can help investors to determine the existence and magnitude of herd effect in the Chinese stock markets, improve stock valuation process, and construct proper investment portfolio.</p> Simon M. S. So Copyright (c) 2022 Simon M. S. So Tue, 20 Dec 2022 00:00:00 -0500 The Effect of US Uncertainty Shock on International Equity Markets: The Role of the Global Financial Cycle <p>We contribute to the literature on the international propagation of uncertainty shocks with a Global Vector Autoregressive (GVAR) model that quantifies the spillover effects of uncertainty shocks in the US on to real equity prices of 32 advanced and emerging countries (besides the US). In this regard, we also account for the role of global financial market conditions in the propagation of these shocks, using high and low values of the Global Financial Cycle (GFCy) index. Using quarterly data over 1980:1 to 2019:2, our findings reveal greater response of advanced markets than emerging counterparts to an US uncertainty shock. Further, we show consistent higher negative responses during weak financial conditions than otherwise, confirming the intervening role of the GFCy index. Our results have important implications for investors and policymakers.</p> Afees A. Salisu, Rangan Gupta, Idris A. Adediran Copyright (c) 2022 Rangan Gupta, Afees A. Salisu, Idris A. Adediran Tue, 20 Dec 2022 00:00:00 -0500 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 Tue, 20 Dec 2022 00:00:00 -0500 The Canadian-Mexico Commodity Trade and Exchange Rate Uncertainty: An Asymmetric Analysis <p>A previous study assessed asymmetric effects of the real peso-dollar volatility on trade flows between Mexico and the U.S., two members of the former NAFTA. We now expand that analysis by considering the trade flows between Mexico and Canada. Estimating traditional linear models did not yield much significant effects of the real peso-Canadian dollar volatility on trade flows between the two countries. However, estimating a nonlinear model revealed that four out of 16 Canadian exporting industries to Mexico and 10 out of 21 Mexican industries to Canada were affected asymmetrically. While the export shares of four Canadian industries was 28.2%, that of 10 Mexican industries, with a non-linear model was 80%. Additionally, while increased volatility boosted exports of four US industries, it had no significant effects on the exports of 10 Mexican industries. In contrast, decreased volatility had no significant effects on the US exporting industries, but it had favorable impact on Mexican exporting industries.</p> Mohsen Bahmani-Oskooee, Hanafiah Harvey Copyright (c) 2022 Mohsen Bahmani-Oskooee, Professor Tue, 20 Dec 2022 00:00:00 -0500 Job Insecurity, Employability and Financial Threat during COVID-19 <p>COVID-19 has resulted not only in widespread illness and death, it has also upended most spheres of social life including the economic/financial one in that it has had large impacts on local economies, resulting in widespread job loss, job insecurity and loss of income. Employability, a psychological construct, refers to the belief that one can get a (another) job in the event of job loss, and financial threat refers to feelings of threat and anxiety associated with one’s finances. During the pandemic, many people experienced job loss due mainly to business closures. The present study examined the relationship between employability, job insecurity due to COVID-19, and financial threat in a Canadian (n= 487) and U.S. (n=481) sample of adults recruited on MTurk early on in the pandemic (April 2020). Participants in the Canadian sample, compared to their American counterparts, were less likely to be employed full-time, 37% vs. 67%, respectively, were more likely to be unemployed, 40% vs. 13%, respectively, and had lower self-reported socio-economic status. &nbsp;A theoretical model was put forward in which employability was associated with less job insecurity and this was related to less financial threat. Results revealed that financial self-efficacy was associated with greater employability, less job insecurity and less financial threat in both samples. Further, feelings that one had enough income to “get by” since the advent of COVID-19, were positively related to employability in both samples, but in the Canadian sample only, these feelings were also related to less job insecurity and less financial threat. Implications of the study’s results are discussed within the economic climate resulting from the pandemic.</p> Esther Greenglass, Lisa Fiksenbaum Copyright (c) 2022 Esther Greenglass, Lisa Fiksenbaum Fri, 06 Jan 2023 00:00:00 -0500 Cultural Integration of First-Generation Immigrants: Evidence from Six European Countries <p>In this study, we aim to explore and compare the frequency of attendance, and the reasons for non-attendance to cultural activities between natives and first-generation immigrants in Belgium, France, Italy, Spain, Sweden, and the UK. The empirical analysis relies on data derived from the special module on cultural participation in the European Union-Income and Living Conditions Survey (EU-SILC) in 2015. We apply discrete choice models, such as the ordered Probit and multinomial Probit models. The results vary across the countries, as in some cases natives and immigrants are less likely to participate in cultural activities because of financial difficulties, while immigrants in areas with high net migration rates show more interest in the cultural activities explored. Age, health conditions, wealth, household income, employment status, and education level, significantly influence the participation in cultural activities. The results highlight that social interactions depend on several factors related mainly to the country of destination, employment opportunities and area effects, and of individual factors related to the migrant, including demographic and economic characteristics, and the length of residence in the host country. The findings show that the length of residence of immigrants in the host countries is positively correlated with a higher frequency of attendance, indicating that cultural participation can be by its nature a long-term process or “experienced” activity. This study contributes to the literature by exploring the determinants of cultural participation and comparing the frequency of participation in cultural activities between natives and first-generation immigrants. Furthermore, the study explores the reasons of non-participation in cultural activities highlighting potential differences between countries and between the European Union (EU) and non-EU migrants. The findings show that in most of the cases, migrants do not attend the cultural activities we explore because of financial constraints, and not due to lack of interest. Thus, this highlights that the economic integration of migrants could be the main driver of cultural participation and integration.</p> Eleftherios Giovanis, Sacit Hadi Akdede Copyright (c) 2022 Eleftherios Giovanis, Sacit Hadi Akdede Fri, 06 Jan 2023 00:00:00 -0500 COVID-19 effects on the Canadian term structure of interest rates <div class="page" title="Page 1"> <div class="layoutArea"> <div class="column"> <p><span style="font-size: 10.000000pt; font-family: 'CMR10';">In Canada, COVID-19 pandemic triggered exceptional monetary policy interventions by the central bank, which in March 2020 made multiple unscheduled cuts to its target rate. In this paper we assess the extent to which Bank of Canada interventions affected the determinants of the yield curve. In particular, we apply Functional Principal Component Analysis to the term structure of interest rates. We find that, during the pandemic, the long-run dependence of level and slope components of the yield curve is unchanged with respect to previous months, although the shape of the mean yield curve completely changed after target rate cuts. Bank of Canada was effective in lowering the whole yield curve and correcting the inverted hump of previous months, but it was not able to reduce the exposure to already existing long-run risks. </span></p> </div> </div> </div> Federico Severino, Marzia A. Cremona, Éric Dadié Copyright (c) 2022 Federico Severino, Marzia A. Cremona, Éric Dadié Tue, 20 Dec 2022 00:00:00 -0500 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 Tue, 20 Dec 2022 00:00:00 -0500 Energy Input Interaction in US Output <p>This paper estimates production functions for annual US output from 1949 to 2013 adding energy Btu input to fixed capital assets and the labor force.&nbsp; Interactions between inputs are parsimoniously introduced in the error correction estimates.&nbsp; Fixed capital assets successfully imbed technology.&nbsp; Energy and capital are weak substitutes or complements due to their positive interaction.&nbsp; Energy is substantially underpaid relative to its increasing productivity while labor is increasingly overpaid relative to its declining productivity.&nbsp; Factor price elasticities involving labor and the wage are noticeably strong.&nbsp; The nearly elastic own wage effect explains the challenges facing labor.</p> Cassandra Copeland, Henry Thompson Copyright (c) 2022 Cassandra Copeland, Henry Thompson Tue, 20 Dec 2022 00:00:00 -0500 The Effect of Different Fields of Tertiary Education on Economic Growth <p>The purpose of this paper is to analyze empirically the contribution of tertiary level education by fields on economic growth for 29 developed and 25 developing countries over the period 1998-2012. Using the two-step System Generalized Method of Moments (GMM), we find that in the developed countries graduates from science faculties make the most contribution to economic growth, but in developing countries graduates from education, humanities and social sciences faculties contributed the most to economic growth. In addition, we focus on the effect of distribution of tertiary level graduates among different fields on economic growth and our results imply that, having human capital from different fields in both developed and developing countries positively affects economic growth.</p> Müzeyyen Merve Serifoglu, Pelin Oge Guney Copyright (c) 2022 Müzeyyen Merve Serifoglu, Pelin Oge Guney Tue, 20 Dec 2022 00:00:00 -0500