Yuan-Ming Lee

The impacts of life insurance asymmetrically on health expenditure and economic growth: dynamic panel threshold approach

Abstract This study examines the impacts of life insurance asymmetrically on health expenditure and economic growth. Using the dynamic panel threshold model, we find that life insurance growth has a regime switch factor that may change the relationship between health expenditure growth and economic growth. Our results show that the asymmetrical information of life insurance growth affects the causal relationship between health expenditure growth and economic growth. In a low life insurance growth regime, the negative growth of life insurance can stimulate health expenditure and economic growth, which can have a positive feedback effect. However, in the interval of high life insurance growth, the growth does not affect health expenditure or economic growth; there is an adverse feedback effect between economic growth and health expenditure growth, whereby economic growth stimulates health expenditure growth, but health expenditure growth reduces economic growth.

How do Economic Growth Asymmetry and Inflation Expectations Affect Fisher Hypothesis and Fama’s Proxy Hypothesis?

Based on the threshold panel data model, this study employs the quarterly panel data of 38 countries between 1981 and 2014 to test whether economic growth asymmetry, expected inflation, and unexpected inflation affect the Fisher hypothesis and Fama’s proxy hypothesis. The empirical results show the following: (1) When real economic growth rate is greater than the threshold (-0.009), Fisher hypothesis is supported. (2) When real economic growth rate is less than the threshold (-0.009), two scenarios hold true: before real variables are included, Fisher hypothesis is rejected; and when real variables are included, real economic growth is negative, inflation is expected, and thus, Fama’s hypothesis is supported.

Dynamic heterogeneous panel analysis of the correlation between stock prices and exchange rates

This article uses quarterly data from 29 countries, during the period from the first quarter of 2000 to the second quarter of 2011, and the Pooled Mean Group (PMG) method to estimate the dynamic heterogeneous panel data model and to verify the correlation between stock prices and exchange rates. According to empirical results, the stock market and the foreign exchange market have a long-run co-integration relationship. In the short-run, the stock market and the foreign exchange market are negatively correlated, supporting the viewpoints of the portfolio approach. However, using the error-correction adjustment process, the long-run relationship between the two is positive, supporting the results of the traditional approach. This study suggests that the viewpoints of both the portfolio approach and the traditional approach can co-exist through long- and short-run adjustments.

Finance, investment and growth: nonlinear time series evidence from 10 Asian economies

This article employs financial development as the threshold variable to construct a threshold model and to re-examine the findings in Rousseau and Vuthipadadorn (2005) for 10 Asian economies. Our results show that in the high financial development regime, financial development could fuel economic growth, which is consistent with the conclusion in Rousseau and Vuthipadadorn (2005); however, there is no evidence shows that financial development could affect investment. In the low financial development regime, financial development has negative influence on investment growth, which is contradictory to the findings in Rousseau and Vuthipadadorn (2005); as to the relation between financial development and economic growth, the causality could not be supported by the data.

Is the Relationship between Stock Returns and Economic Growth Disappearing? A Cross-Sectional Analysis

By employing the cross-sectional data of 49 countries from 1960 to 2003 and constructing the threshold regressive (TR) model, this study re-examines the finding of Binswanger (2004) that the relationship between the stock returns and economic growth is disappearing. Our empirical results from various sample periods indicate that the significantly positive relationship between the stock returns and economic growth exists in both high-income and low-income countries. From our findings we conclude that the empirical result from a linear estimation of Binswanger (2004) is only partially correct. Our findings show that the disappearing relationship only exists in high-income countries.