No abstract

No abstract

Due to innovation, productivity surged and the structure of exports shifted towards sophisticated products in recent decades. In this study, I analyse the determinants of export sophistication with a special focus on the effects of digitalization for 61 countries by employing three measures of export sophistication. To my knowledge, this is the first study that investigates the nexus between digitalization and sophistication. It is found that exports get more sophisticated as digitalization promotes. In line with the literature, institutional quality, access to credit, and R&D are concluded to be other drivers of export sophistication. However, the evidence on tertiary enrolment and FDIs is mixed. Finally, the level of democracy seems to have a limited effect on sophistication indicating countries that have an autocratic rule also have a chance to sophisticate their exports. In the light of these findings, governments are advised to improve property rights, rule of law, the ease of doing business, access to credit, tertiary enrolment, and R&D expenditures to sophisticate their export baskets.

The study primarily explores the linkage between wealth effects, arising from stock and housing market channels, and household final consumption for 11 advanced countries over the period from 1970 Q1 to 2015 Q4. As a modelling strategy, we employ regression analysis through the common correlated effects mean group (CCEMG) estimator, as well as Durbin-Hausman cointegration and Dumitrescu and Hurlin (2012) causality tests. The study provides various pieces of evidence through whole-panel and country-level analyses. In this respect, we find that consumption is mostly explained by income and housing wealth is positively and significantly correlated with consumption. As counter-intuitive evidence, we detect a negative linkage between consumption and stock wealth. The evidence also suggests a long-run cointegration relationship among consumption, income, interest rates, housing wealth, and stock wealth. Moreover, we find bidirectional causality between consumption and income, stock wealth, housing wealth, and interest rates. Overall, the evidence implies that housing wealth, rather than stock wealth, is the primary source of consumption growth in advanced countries.

The views represented in this paper are those of the authors and do not necessarily reflect the positions or policies of the Undersecretariat of Treasury. We thank the editor and two anonymous referees for valuable comments and suggestions.