Asian Journal of Economic Modelling

Exchange rate, GDP, and inflation in Tunisia: ARDL evidence of a u-shaped relationship

2025-11-21T23:09:34-06:00

This paper investigates the nonlinear impact of the TND/USD exchange rate and real GDP on inflation in Tunisia over the period 1984–2023 using the autoregressive distributed lag (ARDL) bounds-testing approach. The analysis introduces quadratic terms to identify possible U-shaped or threshold relationships between the variables. Unit root tests confirm that all series are integrated of order one, I(1), and the bounds test indicates the existence of a long-run cointegration relationship (F-statistic ≈ 8.59). The estimated error-correction model suggests a rapid adjustment toward long-run equilibrium, as reflected by the significant and negative error-correction term (−1.64, p < 0.01). In the short run, inflation exhibits a partial exchange-rate pass-through, while in the long run, price dynamics are primarily influenced by real GDP growth. Quantitatively, the estimated turning points obtained from the quadratic specification occur at GDP ≈ 2.9 × 10¹⁰ (2015 USD) and EXCH ≈ 1.4 TND/USD, implying that inflation decreases up to these thresholds and rises beyond them. Overall, the results highlight the relevance of nonlinear monetary and exchange-rate policies that consider threshold effects to enhance price stability in the Tunisian economy.

Aggregate supply and demand determinants of economic growth in West Sumatra, Indonesia: A dynamic panel approach

2026-01-19T07:21:05-06:00

This study investigates the determinants of economic growth in West Sumatra Province over the period 2011–2023, focusing on both supply- and demand-side factors. A dynamic panel regression model is employed using the Generalized Method of Moments approach, which is particularly suitable for addressing potential endogeneity issues and capturing temporal dynamics in panel data analysis. The explanatory variables include aggregate supply-side factors, namely lagged economic growth, investment, labor, technology, and the Human Development Index (HDI), as well as aggregate demand-side factors, consisting of household consumption, government expenditure, and net exports. The estimation results reveal that, on the supply side, previous economic growth, investment, technology, and HDI exert a positive and statistically significant impact on regional economic growth, while labor does not show a significant effect. On the demand side, household consumption and government expenditure are found to have significant positive influences, whereas net exports are not statistically significant, reflecting the limited contribution of export activities to the regional economy. These findings highlight the dual importance of supply-side improvements and demand-side reinforcement in sustaining economic growth.

Deep trade agreements and cross-border innovation collaboration: Evidence from ASEAN

2026-01-23T12:01:30-06:00

This study investigates whether deeper regional trade agreements (RTAs) increase the likelihood of co-patenting activities between ASEAN nations and innovative partners, addressing a potential gap in the literature. Unlike prior studies, we construct indices capturing co-invention and co-application of patents based on the fractional patent counting approach. A gravity-like model of cross-country technological collaboration is developed, incorporating fixed effects to account for unobserved heterogeneities at the country-pair level and time-varying characteristics that may influence cross-border links. The baseline results suggest that, although the static positive effects of trade integration on joint innovation activities are not immediately evident, agreements with a broader scope tend to promote such activities, particularly in the case of co-invention of patents. Sensitivity analyses indicate that RTAs containing provisions related to innovation are more likely to foster intra-bloc collaboration among signatories. Additionally, dynamic analysis reveals anticipation and phasing-in effects of trade policy changes, as evidenced by estimates of leads and lags in trade agreement indices. Overall, the findings demonstrate that deep trade integration has both short-term and long-term positive effects on collaborative innovation activities.

The spatial analysis of FDI, R&D and economic growth in China

2026-01-23T12:13:25-06:00

This study aims to examine the spatial spillover effects of foreign direct investment (FDI) and research and development (R&D) on China’s economic growth. Using panel data from 30 provinces between 2000 and 2022, the study applies spatial econometric models incorporating foreign trade openness, government expenditure, and population to capture interregional dynamics. The results reveal that both FDI and R&D significantly enhance provincial economic growth and exert positive spatial spillover effects on neighboring regions. Specifically, a 1% increase in FDI and R&D capital stock raises GDP by 0.02% and 0.05%, respectively, while interprovincial spillovers contribute 0.71% to the growth of adjacent provinces. These findings suggest that institutional innovation, regional cooperation, and the establishment of high-quality FDI-driven R&D centers are crucial to fostering a sustainable FDI–R&D–regional growth mechanism in China’s economy.

Ownership structure and dividend payout of listed firms in Bangladesh: An application of the Tobit model

2026-01-23T13:20:52-06:00

This study investigates the impact of ownership structure on the dividend payout of firms in Bangladesh over a fourteen-year period from 2008 to 2021. It considers managerial ownership, institutional ownership, and individual ownership, along with eight control variables, to identify their effects on dividend payout. The research employs multiple techniques to analyze the collected panel data, including the Tobit pooled and Tobit random effect models. To improve the efficiency of these models, the study applies bootstrap standard error estimation. The results reveal that institutional ownership (INSOW) is positively associated with dividend payout, indicating the influential role of institutional investors in dividend decisions. These findings are significant for investors, researchers, policymakers, and company management regarding dividend payout strategies. The study provides empirical validation for agency theory by demonstrating that institutional investors reduce monitoring costs, offering a clear policy impetus for regulators to encourage greater institutional ownership as a mechanism to protect minority shareholders. Additionally, it offers valuable insights into how various ownership structures influence dividend decisions in emerging countries, specifically within the context of Bangladesh. This research fills a notable gap in the existing literature on corporate payouts. The findings have important implications for investors, providing a framework for both individual and institutional investors to identify stable investment opportunities.

Does lowering and narrowing the inflation target band enhance the effectiveness of monetary policy transmission? Evidence from South Africa

2026-01-27T21:36:28-06:00

The South African Reserve Bank has indicated since 2024 the urgency to lower the current inflation target (IT) band from 3-6% to a lower target point. This paper estimates the impact of various IT bands on the interest rate pass-through and the mark-up of repo rate changes to weighted lending rates in South Africa. It examines whether the interest rate pass-through to lending rates differs when inflation is within three ranges: (i) 0-3%, (ii) 3-6%, or (iii) above 6%. The findings suggest that the pass-through is higher and the mark-up is lower when inflation is between 0-3% compared to within the 3-6% band. Additionally, the paper explores the effects of narrowing the target band from 3-6% to 2-4%. Evidence indicates that narrowing the target band from 3-6% to 2-4% results in a higher interest rate pass-through to lending rates. These findings imply that the transmission of monetary policy is more effective when inflation is within the 2-4% range. Consequently, the SARB's adoption of a lower inflation target will enhance the transmission of policy rate changes to lending rates and reduce the mark-up.

How market concentration influences bank lending? Empirical evidence from Vietnam

2026-02-06T07:36:26-06:00

This paper investigates how market concentration affects bank lending in Vietnam, utilizing an unbalanced panel of 28 commercial banks from 2007 to 2023. Results indicate that greater market concentration enhances bank lending, implying dominant banks use their market power to expand credit. Quantile regression reveals this effect is stronger among banks with high loan growth, underscoring the significance of economies of scale, stable funding sources, and relationship banking in facilitating credit expansion within a concentrated banking sector. Bank-specific factors such as profitability, funding diversification, and CASA ratio also significantly drive loan growth. Robustness checks using Herfindahl-Hirschman indexes based on total loans and deposits confirm these outcomes. Contrary to traditional competition theory, the findings suggest that concentration can foster credit expansion in Vietnam’s banking sector. Notably, the positive concentration-lending nexus is more substantial in higher loan growth quantiles, indicating heterogeneous effects across the credit supply distribution. The study incorporates key macroeconomic variables—GDP growth, inflation, and the COVID-19 pandemic to offer a comprehensive view of Vietnam’s lending landscape. These insights contribute to shaping competition policies and banking reforms in emerging markets, providing empirical support for the relationship between market structure and credit dynamics in transitional economies.

Effects of public health restrictions during the pandemic on Kuwait’s equity market: An ARDL bounds testing approach

2026-02-10T04:25:00-06:00

The objective of this study was to examine the effects of public health restrictions during the pandemic on the equity market in Kuwait by employing daily data collected over the period from January 23, 2020, to December 31, 2021. The study used the Autoregressive Distributed Lag (ARDL) model to evidence cointegration between the Kuwaiti equity market and public health restrictions (NPIs). The findings indicate that the long-term adverse impact of public health restrictions such as school closures, stay-at-home orders, and travel bans has resulted in worsening market performance. Conversely, the equity market reacts positively to restrictions on gatherings. The study also found a positive association between the S&P 500 and the Kuwaiti equity market, implying that the S&P 500 positively impacts the Kuwaiti market. This research contributes to understanding market behaviors and offers strategic insights for risk mitigation and market resilience during future crises. Future research could incorporate sentiment measures, nonlinear ARDL methods, or comparative studies across GCC financial markets to deepen understanding of policy–market interactions during systemic shocks. Expanding on this study enhances understanding of the impact of public health restrictions on emerging country financial markets under pandemic conditions, providing valuable insights for policymakers and investors in future crises.

Exploring the determinants of income dynamics during crisis and recovery: A multinomial logit analysis of Vietnamese workers

2026-02-11T05:11:53-06:00

This paper examines income dynamics among Vietnamese workers during the COVID-19 pandemic and the subsequent recovery period. Using the Labor Force Survey (LFS) conducted by the General Statistics Office of Vietnam from 2020 to 2023, the study analyzes more than 1.5 million individual observations. A multinomial logit model is employed to predict the probability of income gains and losses based on demographic characteristics, human capital, employment attributes, and institutional factors. The results show that income differentiation mirrors labor market segmentation. First, female workers are more likely to experience income increases, while male workers have a higher probability of income losses, with odds ratios ranging from 1.04 to 1.07 and 0.87 to 0.99, respectively. This suggests that women may have stronger long-term income resilience. Second, individuals with higher educational attainment are less likely to suffer income declines and are also less likely to recover income losses in the post-pandemic period, highlighting the protective role of education against economic shocks. By focusing on income movements rather than income levels, the study offers new evidence that women do not necessarily face higher income risk; instead, they demonstrate relatively strong income adjustment capacity. These findings contribute to understanding how Vietnamese workers adapt to income uncertainty in the digital era.

Do cryptocurrencies and gold hedge against market risks? A wavelet coherence analysis of ASEAN+2 and G5 countries

2026-02-11T13:49:57-06:00

Stock market volatility, economic shocks, and geopolitical tensions have intensified recently, resulting in heightened uncertainty and disruptions in global financial markets with ASEAN+2 and G5. Identifying reliable hedging and safe haven assets is therefore critical for risk management. Moreover, effective hedging and safe haven strategies are important to reduce the risk of a portfolio for investors and help keep the market stable by lowering market contagion and boosting investor confidence. Therefore, this study examines the hedge and safe-haven properties of various cryptocurrencies, Bitcoin, Bitcoin Cash, Cardano, Chainlink, Dogecoin, Ethereum, Ripple, and Tron, and gold against stock markets in ASEAN+2 (Indonesia, Malaysia, Singapore, Thailand, Vietnam, China, and Russia) and G5 countries (France, Germany, Japan, the United Kingdom, and the United States) over the period 2017–2024. The findings, derived from wavelet coherence analysis, reveal that these properties are not uniform but vary significantly by market, investment horizon (particularly beyond 128 days), and period (e.g., during crises vs. stability). This study underscores the limitation of static correlation-based methods and highlights the importance of wavelet coherence in revealing short-, medium-, and long-term correlations that traditional methods may overlook. The results provide crucial insights for investors and policymakers to enhance financial stability through better anticipation of market dynamics.