|
The Construction-Development Curve:
Evidence from a New International Dataset
--Daniele Girardi and Antonio Mura
Using a new dataset of construction investment in countries across the world for the period 2000-2011, this paper provides novel evidence of a bell-shaped relationship between the share of construction in GDP and economic development. The relative level of construction activity tends to increase in developing countries, to peak during industrialization and to decrease at a slowing pace in industrialized countries, approaching stabilization in mature economies. The curve fits better if economic development is measured by alternative indicators instead of per capita GDP, namely, life expectancy and an Economic Development Index (EDI) which takes into account per capita income, life expectancy, maternal mortality ratio and the share of agriculture in employment. On average, the peak in construction activity is reached at a per capita income level of almost €5,000 (at PPP, 2011 prices), or when life expectancy in the country has reached around 67 years. At its peak, construction accounts for about 14% of a country’s GDP. The curve is robust to the inclusion of control variables. Population density, demographic growth and credit expansion do not explain cross-country variation in the share of construction in output, while there is weak evidence that a less concentrated income distribution is positively related to the size of the construction sector.
© 2014 IUP. All Rights Reserved.
Linear and Nonlinear Causal Nexus
Between Oil Price Changes and Stock Returns in India:
An Empirical Assessment
--Sajad Ahmad Bhat, Md Zulquar Nain and Bandi Kamaiah
This paper examines both the linear and nonlinear causal relationship between crude oil price changes and stock market returns in India. In particular, the study applies alternative unit root tests with and without structural break to ascertain the shifts in crude oil price changes and stock market returns for the period 1991:01 to 2013:08. The linear and nonlinear causality tests are conducted using the standard Vector Autoregression (VAR) and the Diks and Panchenko (2006) frameworks respectively. The results from the unit root tests indicate that crude oil price changes and stock market returns are stationary. The results from the standard VAR model provide evidence of unidirectional causality from stock returns to crude oil price changes. The results of the Diks-Panchenko causality test, however, support nonlinear bidirectional causality between the two variables.
© 2014 IUP. All Rights Reserved.
The Effect of Intellectual Capital on Firms’ Valuation:
An Empirical Investigation with Reference to India
--Trilochan Tripathy, Ashok Kumar Sar and Debadatta Sahoo
The paper examines empirically the relation between intellectual capital efficiency and firms’ market valuation in India. Using data from Indian listed companies and Pulic’s Value Added Intellectual Coefficient (VAIC) measure, the paper constructs panel regression models for 10 years across seven industrial categories to examine the relationship between the intellectual capital efficiency and firms’ Market-to- Book Value (MTBV). The results suggest that the explanatory power of the individual components of intellectual capital efficiency (physical capital efficiency, human capital efficiency and structural capital efficiency) is observed to be better than the aggregate composite measure (VAIC). The results also affirm that expenditure on innovative capital and relational capital captures additional information on structural capital and has a positive effect on firms’ value contemporaneously. Further, in the presence of all the intellectual capital components, firms with greater innovative capital and relational capital in the ensuing year tends to have higher MTBV in the following year. The study does not support the idea that after controlling for structural capital efficiency, the firms with greater innovative capital tend to have higher MTBV during pre- and post-2008 financial crisis in general and across the Indian industries. The results extend the understanding of the role of intellectual capital in creating firms’ MTBV for companies in Indian economy.
© 2014 IUP. All Rights Reserved.
|
