Structural Breaks in Interactive Effects Panels and the Stock Market Reaction to COVID-19

Dealing with structural breaks is an essential step in most empirical economic research. This is particularly true in panel data comprised of many cross-sectional units, which are all affected by major events. The COVID-19 pandemic has affected most sectors of the global economy;however, its impact on stock markets is still unclear. Most markets seem to have recovered while the pandemic is ongoing, suggesting that the relationship between stock returns and COVID-19 has been subject to structural break. It is therefore important to know if a structural break has occurred and, if it has, to infer the date of the break. Motivated by this last observation, the present article develops a new break detection toolbox that is applicable to different sized panels, easy to implement and robust to general forms of unobserved heterogeneity. The toolbox, which is the first of its kind, includes a structural change test, a break date estimator, and a break date confidence interval. Application to a panel covering 61 countries from January 3 to September 25, 2020, leads to the detection of a structural break that is dated to the first week of April. The effect of COVID-19 is negative before the break and zero thereafter, implying that while markets did react, the reaction was short-lived. A possible explanation is the quantitative easing programs announced by central banks all over the world in the second half of March.

Philosophy of education in a new key: Who remembers Greta Thunberg? Education and environment after the coronavirus

This paper explores relationships between environment and education after the Covid-19 pandemic through the lens of philosophy of education in a new key developed by Michael Peters and the Philosophy of Education Society of Australasia (PESA). The paper is collectively written by 15 authors who responded to the question: Who remembers Greta Thunberg? Their answers are classified into four main themes and corresponding sections. The first section, ‘As we bake the earth, let's try and bake it from scratch', gathers wider philosophical considerations about the intersection between environment, education, and the pandemic. The second section, ‘Bump in the road or a catalyst for structural change?', looks more closely into issues pertaining to education. The third section, ‘If you choose to fail us, we will never forgive you', focuses to Greta Thunberg's messages and their responses. The last section, ‘Towards a new (educational) normal', explores future scenarios and develops recommendations for critical emancipatory action. The concluding part brings these insights together, showing that resulting synergy between the answers offers much more then the sum of articles' parts. With its ethos of collectivity, interconnectedness, and solidarity, philosophy of education in a new key is a crucial tool for development of post-pandemic (philosophy of) education.

Fiscal Deficit and Money Issuance in Czech Republic during COVID-19 Pandemic

The public finances of the Czech Republic fell into deep deficits during the pandemic, while the money supply growth rate accelerated. We make a basic comparison of monetary acceleration during the first two years of the pandemic with other countries. We verify that this acceleration in the Czech Republic was partly due to commercial banks increasing credit to the government. We argue that purchases of government bonds by non-residents have a similar effect. This is particularly true when non-residents use existing koruna deposits held by them, partly as a result of past foreign exchange interventions, to purchase government bonds. While there was an acceleration in monetary growth during the pandemic, there was a decline in monetary growth during the Great Financial Crisis (GFC). However, our analysis suggests that this was due mainly to a decline in private credit growth during the GFC. We see no fundamental reasons for a structural change in money demand as a result of the pandemic. We therefore believe that unless the observed monetary acceleration is offset by slower-than-trend monetary growth in the near term, it will translate into an increase in the price level.

Reexamining racism, sexism, and identity taxation in the academy

Amid the 2020 COVID pandemic and officer-involved deaths of numerous Black Americans, US colleges and universities stated commitments to improve ethnoracial diversity and address structural racism. This type of diversity-related work, which fell mostly upon faculty of colour, was not new, however. In 1994, Padilla coined the term "cultural taxation” to describe the disproportionate labour faculty of colour are expected to perform. Hirshfield and Joseph expanded on this work by developing the term "identity taxation” to emphasize labour performed by faculty from marginalized groups because of their intersectional identities. Scholarship about these concepts has since proliferated. This special issue brings together a diverse group of scholars studying these topics to spark much needed structural change through providing: 1) additional terminology describing nuances of identity taxation;2) empirical insights about identity taxation for groups not previously examined;and 3) recommendations for resistance and advocacy to change inequitable practices.

Air pollution and mobility in the Mexico City Metropolitan Area in times of COVID-19

This paper analyzes the relation between COVID-19, air pollution, and public transport mobility in the Mexico City Metropolitan Area (MCMA). We test if the restrictions to economic activity introduced to mitigate the spread of COVID-19 are associated with a structural change in air pollution levels and public transport mobility. Our results show that mobility in public transportation was significantly reduced following the government's recommendations. Nonetheless, we show that the reduction in mobility was not accompanied by a reduction in air pollution. Furthermore, Granger-causality tests show that the precedence relation between public transport mobility and air pollution disappeared as a product of the restrictions. Thus, our results suggest that air pollution in the MCMA seems primarily driven by industry and private car usage. In this regard, the government should redouble its efforts to develop policies to reduce industrial pollution and private car usage. © 2023 Universidad Nacional Autónoma de México, Instituto de Ciencias de la Atmósfera y Cambio Climático. This is an open access article under the CC BY-NC License (http://creativecommons.org/licenses/by-nc/4.0/).

Welfare and Output With Income Effects and Taste Shocks*

We present a unified treatment of how welfare responds to changes in budget sets or technologies with taste shocks and nonhomothetic preferences. We propose a welfare metric that ranks production possibility frontiers that differs from one that ranks budget sets and characterize it using a general equilibrium generalization of Hicksian demand. This extends Hulten's theorem, the basis for constructing aggregate quantity indices, to environments with nonhomothetic and unstable preferences. We illustrate our results using both long- and short-run applications. In the long run, we show that if structural transformation is caused by income effects or changes in tastes, rather than substitution effects, then Baumol's cost disease is twice as important for our preferred measure of welfare. In the short run, we show that standard chain-weighted deflators understate welfare-relevant inflation for current tastes. Finally, using the COVID-19 recession, we illustrate that chain-weighted real consumption and real GDP are unreliable metrics for measuring welfare or production when there are taste shocks.

Housing Supply and Liquidity in the COVID-19 Era

This report documents changes in national housing supply and liquidity during the COVID-19 era using a suite of monthly indices, ranging from summary statistics (mean and median time on the market, proportion of homes sold, etc.) to more advanced econometric indices that can address censoring and unobserved heterogeneity. The results indicate a sharp structural break in most of the indices near the start of COVID-19 in March 2020, though each index's most likely break date varies by a few months. The findings suggest that the start of the pandemic saw a supply decrease, followed by an immediate and sustained price increase. Listings became more likely to be withdrawn, but those that sold did so faster relative to pre-COVID-19 levels, indicating a change in the distribution of housing market liquidity. Finally, the results suggest that there were different types of structural breaks, specifically changes in the level, slope, and seasonality of the indices.

Analysis of the Frequency-Based Relationship between Inflation Expectations and Gold Returns in Turkey

This paper explores the relationship between inflation expectations and gold returns of monthly and annual maturities in Turkey from 2006 to 2020 with 177 monthly observations through the application of wavelet cohesion and causality tests. The findings reveal significantly negative cohesion in the short term and significantly positive cohesion in the long term, indicating that the hedging ability of gold prices exists only in the long term during crisis periods. Therefore, the findings provide evidence for the validity of the expected inflation effect hypothesis in Turkey. The ordinary least squares results, on the other hand, show that the ongoing COVID-19 pandemic is the most prominent factor in the movement of inflation and gold at all wavelet scales for the two types of maturities. The continuous wavelet transformation based Granger-causality test provides little evidence for out-of-phase and unidirectional causality running from the inflation expectations to gold returns in the higher and medium frequency bands. Furthermore, the QQR results show an asymmetrical impact on each other-implying a hedging effectiveness of gold against inflation expectations-and reveal that its size and magnitude change significantly under different economic conditions and data frequencies. The results have significant implications for portfolio and risk management during normal market conditions as well as hedging and speculation activities during crises in short term and long term periods, respectively.

Rural unions and labor relations in Rio Grande do Sul (Brazil). Did something change because of the COVID-19 crisis? [Portuguese]

Unionism in Brazil is undergoing a profound transformation in terms of strategies for mobilization and managing of the union structure. In addition to the labor reforms, introduced in 2017 by the Temer government, and after 2019, with the arrival of Jair Bolsonaro, the COVID-19 crisis further affected the union system and its logic of action. Rural unionism is not exempt from these changes. The research explores rural unionism and its changes as a result of the COVID-19 crisis. The study uses a typical qualitative approach: twenty interviews with rural salaried workers and union leaders from Rio Grande do Sul were collected, the interviews were recorded, while the analysis explored its content. The article delves into three dimensions of analysis and explains similarities among labor unions when acting against COVID-19.

The Speed and Quality of China’s Economic Growth during the Covid-19 Pandemic

The purpose of this study is to understand the speed and quality of China's economic growth during the COVID-19 pandemic. This study defines high-quality economic growth as a growth rate with a low variance and adopts quarterly time-series data for China's real GDP growth rate to analyze its regime switches and structural changes by estimating a conditional Markov chain model. The study further utilizes the estimated parameters to predict the smoothed probabilities of each of four joint states for China's real GDP growth rate from 2021 Q4 to 2025 Q3. The primary finding of this study is that, during the period from 2020 Q1 to 2021 Q3, the outbreak of COVID-19 shocked China's economy and its economic growth rate fluctuated dramatically, which resulted in its variance being relatively high. However, China's economic growth rate is very likely to gradually stabilize (as evidenced by a low variance) and to grow at a medium-to-high speed with high quality during the forecast period.

Attribution of Changes in Vietnam’s Labor Productivity

This study examines the change in labor productivity in Vietnam by means of a Fisher index decomposition and attribution analysis. The results can be summarized as follows. First, the aggregate labor productivity is decomposed into pure labor productivity and structural change from 2007 to 2019. All of the aggregate labor productivity, pure labor productivity, structural change, and interaction terms have increased by 69.83%, 36.74%, 24.20%, and 8.89%, respectively. Second, the percentage change in labor productivity is attributed to 20 sub-industries by pure labor productivity and structural change. The sum of the multi-period attribution of pure labor productivity and structural change shows that the manufacturing industry positively dominates (15.84%) and plays a key role in economic development. The positive pure labor productivity and structural change in the manufacturing industry imply that the structural bonus hypothesis does hold in the industry. The findings also indicate that pure labor productivity, especially in the service industry, should be improved to sustain economic growth.

Does the shape of economic recovery matter? An alternative unit root test with new smooth transition model.

The subject of economic recovery after the Coronavirus pandemic has received much attention in the media and by academics in recent years. Pandemic experience creates a new transition between the pre-pandemic era trend and the post-pandemic era trend related to the major economic indicators' time series path. This paper offers a new smooth transition model and a unit root testing procedure to test null of non-stationary against the alternatives of stationary that allow for a pit shape smooth transition from the pre-pandemic trend to post-pandemic trend. The properties of the test statistics are investigated with several simulation studies. Also, the new model and unit root testing procedure are applied to industrial production index, consumer price index and the unemployment rates of Global 8 countries and results state the usefulness of these new tests.

Alternative Views on Portuguese Stagnation: From the Euro’s Inception to the COVID-19 Pandemic

Over the past two decades, real GDP per capita in Portugal has nearly stagnated. The conventional account attributes this to the mismanagement of public finances and the lack of structural reforms in labor and product markets prior to the “adjustment program” agreed with the troika in the early 2010s. In the same vein, the neoclassical-inspired interpretation explains the subsequent recovery based on supply-side and fiscal reforms implemented during the troika years, which would account for the reduced fiscal deficits, external equilibrium and employment growth registered in the pre-COVID-19 period. In this article, we challenge this optimistic view, identifying structural weaknesses of the Portuguese economy that would have soon become apparent even if the pandemic had not happened. Addressing these weaknesses requires changes that go beyond the EU and national responses to the pandemic crisis.

Food systems during the COVID-19 pandemic: vulnerabilities, adaptations, and resilience

This paper reviews the emerging literature on food systems and food supply chains during the COVID-19 pandemic. Four themes are explored: consumer demand and retail market effects;supply-side shocks;food system and supply chain resilience;and developing countries and food insecurity. The effect of demand-side shocks is explored, including the sudden shift in expenditures from food service to food retail. Longer-run structural changes in the food retailing landscape include the expansion of online food delivery. The effect of supply-side shocks is examined extensively in the literature, including short-run adaptations as supply chains pivoted from the food service sector to food retail, along with supply-side disruptions due to labour force outbreaks of COVID-19. Resilience is a common theme in the literature, at both food system and food supply chain levels. While a variety of perspectives are offered, most assessments point to a surprising degree of resilience and adaptability, while identifying the points of vulnerability. The pandemic increased food insecurity through the effect on household incomes from reduced labour mobility, lockdowns, and a contraction in economic activity. These effects were particularly prominent among vulnerable populations in developing countries. Significant attention has been paid to the short- and medium-run effects of the pandemic on food systems, with further research needed to understand any longer-term structural changes that may arise. The COVID-19 pandemic offers lessons for the robustness of food systems and the importance of timely, well-informed policy responses in preparation for future global shocks.

The Productivity Puzzle: A Critical Assessment and an Outlook on the COVID-19 Crisis

This contribution critically assesses the productivity puzzle and gives an outlook on the COVID-19 crisis. It offers two main conclusions. First, it posits that a large fraction of the productivity puzzle can be solved by incorporating intangible capital into the asset boundary of the national accounts. Thus, the productivity puzzle is largely explained as a consequence of fundamental structural changes that are underway, transforming industrial economies into knowledge economies. Secondly, the contribution foresees a post-COVID-19 scenario that is likely to lead to a pronounced increase in labor productivity growth. This depends, however, on whether the current push for digitization will be backed by actual investments in digitization and the necessary complementary investments in (business and public) intangible capital. © 2022, The Author(s).

Determinants of domestic trade development in Ukraine

Intensification of globalization processes and transition of economically developed countries to the post-industrial stage of development determine the modern vector of structural and institutional transformation of the domestic market as a whole and trade in particular. The article is aimed at estimating the determinants of the development of domestic trade in Ukraine. The indicators of internal trade development are analyzed. The regional structure of retail turnover of Ukraine is provided. The risks and threats of foreign trade liberalization for domestic producers are characterized. The share of imported food and non-food products sold through the trade network of enterprises is computed. The commodity structure of imports by wide economic categories is provided. The risks of growing import dependence of the Ukrainian economy in terms of goods for final and intermediate consumption are identified. It is substantiated that one of the important vectors of improving the efficiency of the national economy is structural changes in the sphere of domestic trade. The prospects for the development of domestic trade in Ukraine are generalized, including those caused by the impact of the COVID-19 pandemic. It is argued that the coronavirus crisis is one of the key challenges for business in modern conditions, covering all its aspects - from sectoral to global supply chains. The priority of digital transformation of enterprises in order to protect their own position from high technologies of competitors and the opportunity to take advantage of greater functionality of digital business models with their adaptability and performance is determined. It is substantiated that the processes of globalization in the context of the coronavirus crisis have slowed down, which can lead to significant changes in the structure of the market, affect the distribution of online and offline trading. The prospect of further research in this direction is the forecasting of challenges and threats of the post-pandemic development for the domestic market of Ukraine.

Forecasting Facing Economic Shifts, Climate Change and Evolving Pandemics

By its emissions of greenhouse gases, economic activity is the source of climate change which affects pandemics that in turn can impact badly on economies. Across the three highly interacting disciplines in our title, time-series observations are measured at vastly different data frequencies: very low frequency at 1000-year intervals for paleoclimate, through annual, monthly to intra-daily for current climate;weekly and daily for pandemic data;annual, quarterly and monthly for economic data, and seconds or nano-seconds in finance. Nevertheless, there are important commonalities to economic, climate and pandemic time series. First, time series in all three disciplines are subject to non-stationarities from evolving stochastic trends and sudden distributional shifts, as well as data revisions and changes to data measurement systems. Next, all three have imperfect and incomplete knowledge of their data generating processes from changing human behaviour, so must search for reasonable empirical modeling approximations. Finally, all three need forecasts of likely future outcomes to plan and adapt as events unfold, albeit again over very different horizons. We consider how these features shape the formulation and selection of forecasting models to tackle their common data features yet distinct problems. © 2021 by the authors. Licensee MDPI, Basel, Switzerland.

The correlates of declining income inequality among emerging and developing economies during the 2000s

Since the early 2000s, trends in income inequality in emerging and developing economies have undergone a noticeable shift. While inequality tended to increase during the 1980s and 1990s, it has tended to fall since the early 2000s. In this paper we analyse the correlates of declining income inequality among emerging and developing economies during the 2000s. We estimate country-specific trends in market and disposable income inequality for a large sample of over 100 countries, and then use econometric analysis to examine the correlates of those trends. We find that the tendency toward declining inequality in the 2000s was stronger in countries with higher initial levels of inequality and larger increases in relative agricultural productivity, country-specific primary commodity prices, and remittance inflows. We also find a role for increases in educational attainments, tax revenues and government social spending, and trade liberalisation, but only in Latin America. The results suggest that the challenge now facing many emerging and developing countries is how to sustain the reductions in inequality achieved since the early 2000s, given the decline in commodity prices since 2015, and the social and economic repercussions of the COVID-19 pandemic. © 2021

La economía latinoamericana durante las primeras décadas del siglo xxi *

Este artículo analiza inicialmente el desempeño de América Latina durante el ciclo económico largo que tuvo lugar entre 1998 y 2014, el cual combinó los efectos regionales de la crisis asiática con una fase de crecimiento impulsada por el superciclo de precios de productos básicos. Sin embargo, el periodo de expansión fue sucedido por un lustro de estancamiento económico, durante el cual se vieron debilitados los logros anteriores, aun antes de que irrumpiera la crisis de la Covid-19, con todas sus consecuencias negativas. Esto constata la persistencia de la vulnerabilidad económica de la región ante choques externos, así como las dificultades para mantener ritmos sostenidos de crecimiento asociados con procesos de cambio estructural que permitan acortar diferencias con los niveles de desarrollo de los países líderes y enfrentar los desafíos de la sostenibilidad ambiental. También se constata que, a pesar de los logros importantes en el plano del desarrollo social en el reciente ciclo de crecimiento, no se lograron quebrar las altas desigualdades estructurales que caracterizan a la región.Alternate :This paper first analyzes the performance of Latin America during the long economic cycle that took place between 1998 and 2014, which combined the regional effects of the Asian crisis with a growth phase driven by a supercycle of commodity prices. However, the expansionary phase was followed by a five-year period of economic stagnation, during which previous achievements were weakened, even before the coviD-19 crisis erupted, with its negative consequences. This confirms the persistence of the region's economic vulnerability to external shocks, as well as the difficulties in maintaining sustained growth rates associated with processes of structural change, which make it possible to reduce the gap in the development levels vis-a-vis the leading countries and face the challenges of environmental sustainability. It is also pointed out that, despite the important achievements in terms of social development during the recent growth cycle, the high structural inequalities that characterize the region were not broken.

Changes in the economy as a system: Entrepreneurship under the influence of covid-19

This research paper summarises the results of the rapid changes in the structure of the economic system as a result of the impact of the Covid-19 pandemic in 2020. The following tasks were set for the research: to describe the national economic system before COVID-19 pandemic in Latvia, to identify and assess the main features of changes in the national economic system during 2020 and to identify and assess the geographical location of structural changes in the country. The obtained results indicate three main tendencies in the structure of the economic system. Some economic segments indicate that the number of employees has increased in the time of the pandemic influence, some almost remained unchanged or experienced a decrease. As the linear changes in the volume of employees in the elements of the main structure of the economy take place to a different extent, then there is also an increase or decrease in the share of certain main segments in the regions of Latvia. © 2021, Latvia University of Life Sciences and Technologies. All rights reserved.