We estimate the effects of the Syrian civil war using a synthetic control method which is based on a counterfactual scenario of an absence of the armed conflict that has led to the humanitarian ...crisis and one of the largest population displacements without a precedent in modern history. By comparing Syria’s growth and development trajectories with the characteristics of a set of sixty-six countries with no armed internal conflict between 1996 and 2021, we can deduce a series of gaps in economic growth, human development, and institutional quality that can be attributed to the civil war. Our analysis shows that the effect of the Syrian civil war on the trajectory of economic growth was temporary and almost disappeared before the start of the COVID-19 pandemic. Conversely, the war led to an unprecedented decline in human development, a high rise in infant mortality, and a prevalent degradation of institutional quality. To the present day, the civil war has led to more than 4500 additional infant deaths with a permanently derailed trajectory of longevity. The unparalleled and permanent deterioration in institutional quality resulting from the war is indicated by a diminished rule of law, civil liberties, government efficiency, and a widespread escalation of corruption. To ensure the internal validity of the findings, the estimated effects were subjected to and passed a variety of placebo checks.
The article argues that the economic scientific community, by disregarding the importance of freedom which was essential for its emancipation and market as its key criterion of choice, is disloyal to ...its own starting points and fundamental principles. By dictating strict methodological rules the neoclassical school has consolidated its monopoly position within economics. The article highlights that this methodological normativism is substantially reducing the diversity of methodological approaches and that such restriction of freedom has become a source of subordination within economic community. The author argues that today a new emancipation is needed, with a strong emphasis on the freedom to forge new approaches and acute awareness of the fact that no theoretical platform can persist without adequate demand for its findings in the science market.
Long-Term Effects of Yugoslav War Kešeljević, Aleksandar; Spruk, Rok
Defence and peace economics,
05/2023, Letnik:
34, Številka:
4
Journal Article
Recenzirano
We examine the long-term effects of civil war in former Yugoslavia on economic growth and development. To this end, we employ the synthetic control methodology, and estimate the missing ...counterfactual scenario for the long-run growth and development of former Yugoslav republics, in the absence of the civil war by matching their growth and development characteristics with non-Yugoslav countries at the similar stages of development. The results suggest that the civil war led to unprecedented long-run growth and development losses. In the absence of the war, per capita income levels of former Yugoslav republics would improve markedly with notable differences in the magnitude of the growth and development gains across the affected countries. The estimated effects of the civil war are robust to a large number of placebo checks, and falsification-based random permutation tests. The results show that not a single former Yugoslav republic down to the present day has achieved the level of per capita income predicted by their synthetic control groups in the years preceding the civil war. Our results show that the Yugoslav civil war appears to be a permanent institutional shock with long-lasting implications for economic growth and development.
In this paper, we revisit the relationship between economic freedom and growth across 407 German districts (Kreise). We build six indicators of economic freedom and cluster them into categories ...reflecting tax rates and size of the government and public sector. Exploiting the variation in the constructed indices of economic freedom, the evidence suggests less indebted districts with a lower share of taxes and a relatively smaller public sector achieve consistently higher growth rates and income levels. The beneficial effect of economic freedom on growth is robust to the variety of specification checks and does not appear to be driven by sample selection. The evidence does not indicate a lower level of economic freedom in former East German districts or greater economic freedom in West German districts but unveils a persistent north–south divide in the post-unification period. In the counterfactual scenario, a transition to the 90th percentile of economic freedom is associated with large income and growth gains. Such a transition would yield higher income levels and growth rates with a notable decrease in regional economic inequality within Germany.
The private sector arguably plays a greater role in sustainability transitions through private investment. The authors apply the four- and five-factor Fama-French models to the Dow Jones ...Sustainability Index (DJSI) and a range of renewable energy indices to evaluate the financial attractiveness of sustainability in general, relative to alternative investments. They find both overperformance and underperformance in the regional DJSIs over the period 2006-2016. In contrast, renewable energy indices have high betas and negative alphas, which makes them financially unattractive. These results imply the need for public support in sustainability transitions, as high risk and low return deter private investment.
Indexes of economic freedom measure the degree to which the policies and institutions of countries are supportive of economic freedom. The authors find a considerable scope for improvement in Index ...of Economic Freedom, created by Heritage Foundation, since not all components of index have equal effect on economic well-being. Contrary to Heritage methodology the authors tackle the aggregation bias and highlight that each index component contributes differently to the level of economic freedom and subsequently to the level of income per capita. The level of fiscal freedom and monetary freedom exert the strongest influence on the overall index of economic freedom. Authors present the new endogenous cross-country ranking of 135 countries from Instrumental Variable-Two Stage Least Squares (IV-2SLS) empirical specification which removes the inconsistencies arising from the arbitrary assumption of the equivalent effect of each component on the overall index and, hence, the level of real income per capita.
The paper exploits the distributional dynamics and structural changes in the endogenous distribution of economic freedom across countries over time by utilizing the Rosenblatt–Parzen Kernel density ...estimator compared to the original distribution based on the methodology proposed by the Heritage Foundation. We utilize the distribution of economic freedom as a tool to identify which policies enhanced the overall level of economic freedom. We develop the distribution of endogenous economic freedom by decomposing effects of economic freedom on the level of income per capita in IV–2SLS estimation framework for a panel of 134 countries to identify the effect of institutions of economic freedom on the level of per capita income. Structural estimates indicate that improvements in the monetary, fiscal, and labor freedom exert the strongest direct effect on the level of economic freedom and indirect effect on the level of real income per capita. Our study demonstrates considerable differences between the original and endogenous distributional dynamics of economic freedom over time. In exploiting the non-parametric setting of endogenous economic freedom, we identify a recent emergence of twin-peak distribution across countries where developing nations have improved the level of economic freedom considerably compared to the initial year.
•We use non-parametric distribution to identify key institutions of economic freedom.•We construct the level of endogenous economic freedom based on two-stage estimation.•We show considerable differences between original and endogenous economic freedom.•We uncover key shifts in the distribution of endogenous economic freedom over time.
This paper outlines some of the environmental and economic implications of an additional CO2 tax of EUR 15/tCO2 in Slovenia in the period 2012-2030 in order to determine whether it yield a double ...dividend. Authors analyze (using E3ME model) different forms of revenue recycling by reducing the social security contributions of either the employers or the employees or by reducing the public deficit, in order to identify the optimal fiscal instrument for improving the environmental and economic welfare (double dividend). In this policy orientated paper authors argue that a reduction of employee social security contributions has more favourable effect than a reduction in employers' social security contributions.
Fiscal rule can be defined as a permanent restriction for fiscal policy, specified by an indicator of fiscal spending. Fiscal rules vary greatly in terms of their respective forms. Therefore, the key ...purpose of this paper is to provide on in-depth account of the problems and dilemmas appearing upon the introduction of different fiscal rules. The five most common forms of fiscal rules are analyzed from the aspect of fiscal consolidation and economic stabilization. The authors describe the requirements for greater effectiveness of fiscal rules and discuss the reasons against their implementation. The final chapter includes a political-economic analysis of the trade-off between government credibility and flexibility in the fiscal policy, a review of different institutional frameworks, penalties and exemptions, and a reflection on what time can be deemed (un)suitable for introducing a fiscal rule. PUBLICATION ABSTRACT
This paper outlines some of the environmental and economic implications of an additional CO2 tax of EUR 15/tCO2 in Slovenia in the period 2012-2030 in order to determine whether it yield a double ...dividend. Authors analyze (using E3ME model) different forms of revenue recycling by reducing the social security contributions of either the employers or the employees or by reducing the public deficit, in order to identify the optimal fiscal instrument for improving the environmental and economic welfare (double dividend). In this policy orientated paper authors argue that a reduction of employee social security contributions has more favourable effect than a reduction in employers' social security contributions.
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