In this study, we analyze the attractiveness of MENA countries to promote FDI inflows. The gravity empirical specification is used to examine the bilateral FDI inflows from sixteen developed countries to eight MENA countries over the period 1985–2010. We estimate FDI determinants using spatial model to evaluate the proximity effect between the parent and host countries. The results show that there is high significant spatial dependence between economies. The third-country effect implies that there are positive regional FDI inflows on the host countries but not at FDI agglomerations level. The integration of the market potential variable in the model shows that FDIs in this region serve the OECD market more than the MENA market. For other determinants, the estimation implies the necessity for the MENA countries to improve their institutional and human infrastructure and to enhance their economic integration in both regional and international levels.
{"title":"The Spatial Dimension of FDI in the MENA Countries","authors":"Oumama Bouabdi","doi":"10.3790/AEQ.61.1.93","DOIUrl":"https://doi.org/10.3790/AEQ.61.1.93","url":null,"abstract":"In this study, we analyze the attractiveness of MENA countries to promote FDI inflows. The gravity empirical specification is used to examine the bilateral FDI inflows from sixteen developed countries to eight MENA countries over the period 1985–2010. We estimate FDI determinants using spatial model to evaluate the proximity effect between the parent and host countries. The results show that there is high significant spatial dependence between economies. The third-country effect implies that there are positive regional FDI inflows on the host countries but not at FDI agglomerations level. The integration of the market potential variable in the model shows that FDIs in this region serve the OECD market more than the MENA market. For other determinants, the estimation implies the necessity for the MENA countries to improve their institutional and human infrastructure and to enhance their economic integration in both regional and international levels.","PeriodicalId":36978,"journal":{"name":"Applied Economics Quarterly","volume":"61 1","pages":"93-113"},"PeriodicalIF":0.0,"publicationDate":"2015-07-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70166975","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines the impact of the tax wedge on productivity using firm-level based TFP data for several OECD countries for the period 2000–2008. The identifying assumption is that labour costs influence firm’s behaviour and its productivity, especially in sectors with relatively higher labour intensity. To address this issue, I estimate the productivity function using the Olley-Pakes approach. Then I apply the differences-in-differences approach, which exploits differential effects of the tax wedge on firms with different labour-intensity. This approach has the advantage that it is possible to control for unobserved factors that, on average, are likely to have the same effect on productivity in any sector. The results suggest that the tax wedge has a relatively negative impact on productivity, especially for small-sized firms.
{"title":"Tax Wedge and Productivity: Empirical Evidence at the Firm Level","authors":"A. Festa","doi":"10.3790/AEQ.61.1.1","DOIUrl":"https://doi.org/10.3790/AEQ.61.1.1","url":null,"abstract":"This paper examines the impact of the tax wedge on productivity using firm-level based TFP data for several OECD countries for the period 2000–2008. The identifying assumption is that labour costs influence firm’s behaviour and its productivity, especially in sectors with relatively higher labour intensity. To address this issue, I estimate the productivity function using the Olley-Pakes approach. Then I apply the differences-in-differences approach, which exploits differential effects of the tax wedge on firms with different labour-intensity. This approach has the advantage that it is possible to control for unobserved factors that, on average, are likely to have the same effect on productivity in any sector. The results suggest that the tax wedge has a relatively negative impact on productivity, especially for small-sized firms.","PeriodicalId":36978,"journal":{"name":"Applied Economics Quarterly","volume":"13 1","pages":"1-23"},"PeriodicalIF":0.0,"publicationDate":"2015-07-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70167344","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study analyses the characteristics of gold to determine its feasibility as a safe haven asset, a diversifier or a hedge, using two principle regression models. The findings show that, for South African investors investing in South African equities or bonds, gold acts as a hedge on average. The findings further demonstrate that for a South African investor, gold does not act as a hedge for international stocks. Last, by analysing the relationship between gold and the stock or bond market, we find that the return for gold is positive on the day that an extreme negative shock occurs in the stock market and is eliminated after two trading days.
{"title":"Gold in the South African market: A safe haven or hedge?","authors":"Yudhvir Seetharam, Lauren Bodington","doi":"10.3790/AEQ.61.4.331","DOIUrl":"https://doi.org/10.3790/AEQ.61.4.331","url":null,"abstract":"This study analyses the characteristics of gold to determine its feasibility as a safe haven asset, a diversifier or a hedge, using two principle regression models. The findings show that, for South African investors investing in South African equities or bonds, gold acts as a hedge on average. The findings further demonstrate that for a South African investor, gold does not act as a hedge for international stocks. Last, by analysing the relationship between gold and the stock or bond market, we find that the return for gold is positive on the day that an extreme negative shock occurs in the stock market and is eliminated after two trading days.","PeriodicalId":36978,"journal":{"name":"Applied Economics Quarterly","volume":"61 1","pages":"331-352"},"PeriodicalIF":0.0,"publicationDate":"2015-01-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70167719","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In response to the European financial crisis and recession that began in 2007, the monetary union member states, the major central banks, and the ECB itself embarked upon an unprecedented effort to stabilize and inject liquidity into financial markets. The result of these activities is the European sovereign debt crisis as well as a portfolio structure in the banking industry that is characterized by a high percentage of credit to the public sector. This situation has been exacerbated by the special regulatory privileges granted for such assets. This paper proposes a strategy to reduce the dominance of public debt in the banking sector and to coordinate the bank restructuring process. The approach includes the option of setting up a European framework for national asset management vehicles. The core idea of this approach is to create national “bad banks” to hold distressed assets and make the “deleveraged” banking institutions fit for the future.
{"title":"Banking and Public Finance as a European Challenge","authors":"H. Rehm","doi":"10.3790/AEQ.60.2.91","DOIUrl":"https://doi.org/10.3790/AEQ.60.2.91","url":null,"abstract":"In response to the European financial crisis and recession that began in 2007, the monetary union member states, the major central banks, and the ECB itself embarked upon an unprecedented effort to stabilize and inject liquidity into financial markets. The result of these activities is the European sovereign debt crisis as well as a portfolio structure in the banking industry that is characterized by a high percentage of credit to the public sector. This situation has been exacerbated by the special regulatory privileges granted for such assets. This paper proposes a strategy to reduce the dominance of public debt in the banking sector and to coordinate the bank restructuring process. The approach includes the option of setting up a European framework for national asset management vehicles. The core idea of this approach is to create national “bad banks” to hold distressed assets and make the “deleveraged” banking institutions fit for the future.","PeriodicalId":36978,"journal":{"name":"Applied Economics Quarterly","volume":"60 1","pages":"91-106"},"PeriodicalIF":0.0,"publicationDate":"2014-12-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70166744","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study investigates the relationship between exports, foreign direct investments (FDI), and economic growth in five Eurozone countries (Greece, Portugal, Ireland, Spain, Italy) using panel data for the period 1970 to 2011. The panel data causality results revealed that there is bidirectional causality between exports and economic development, while there is no causality between economic growth and FDI nor between FDI and exports.
{"title":"Exports, Foreign Direct Investment, and Economic Growth for Five European Countries: Granger Causality Tests in Panel Data","authors":"N. Dritsakis, Pavlos Stamatiou","doi":"10.3790/AEQ.60.4.253","DOIUrl":"https://doi.org/10.3790/AEQ.60.4.253","url":null,"abstract":"This study investigates the relationship between exports, foreign direct investments (FDI), and economic growth in five Eurozone countries (Greece, Portugal, Ireland, Spain, Italy) using panel data for the period 1970 to 2011. The panel data causality results revealed that there is bidirectional causality between exports and economic development, while there is no causality between economic growth and FDI nor between FDI and exports.","PeriodicalId":36978,"journal":{"name":"Applied Economics Quarterly","volume":"60 1","pages":"253-272"},"PeriodicalIF":0.0,"publicationDate":"2014-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70167155","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this paper, we assess the usefulness of constant gain least squares (CGLS) when forecasting the unemployment rate. Using quarterly data from 1970 to 2009, we conduct an out-of-sample forecast exercise in which univariate autoregressive models for the unemployment rate in Australia, Sweden, the United Kingdom and the United States are employed. Results show that CGLS very rarely outperforms OLS. At horizons of six to eight quarters, OLS is always associated with higher forecast precision, regardless of model size or gain employed for Australia, Sweden and the United States. Our findings suggest that while CGLS has been shown valuable when forecasting certain macroeconomic time series, it has shortcomings when forecasting the unemployment rate. One problematic feature is found to be an increased tendency for the autoregressive model to have explosive dynamics when estimated with CGLS.
{"title":"On the Usefulness of Constant Gain Least Squares when Forecasting the Unemployment Rate","authors":"J. Antipin, F. Boumédiène, Pär Österholm","doi":"10.3790/AEQ.60.4.315","DOIUrl":"https://doi.org/10.3790/AEQ.60.4.315","url":null,"abstract":"In this paper, we assess the usefulness of constant gain least squares (CGLS) when forecasting the unemployment rate. Using quarterly data from 1970 to 2009, we conduct an out-of-sample forecast exercise in which univariate autoregressive models for the unemployment rate in Australia, Sweden, the United Kingdom and the United States are employed. Results show that CGLS very rarely outperforms OLS. At horizons of six to eight quarters, OLS is always associated with higher forecast precision, regardless of model size or gain employed for Australia, Sweden and the United States. Our findings suggest that while CGLS has been shown valuable when forecasting certain macroeconomic time series, it has shortcomings when forecasting the unemployment rate. One problematic feature is found to be an increased tendency for the autoregressive model to have explosive dynamics when estimated with CGLS.","PeriodicalId":36978,"journal":{"name":"Applied Economics Quarterly","volume":"60 1","pages":"315-336"},"PeriodicalIF":0.0,"publicationDate":"2014-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70167284","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract It is frequently claimed that the current EUR/USD exchange rate is too high and that a depreciation of the EUR against the USD would help to relieve the Eurozone economy from its current state of persistent crisis. Evidence provided by the a/simmetrie annual econometric model suggests that this claim is unsupported by the data, at least as far as the Italian economy is concerned. In fact, the size and sign of the trade elasticities show that the increases in net exports towards non-Eurozone countries, brought about by the depreciation of the euro, would be offset by an increase in net imports from Eurozone countries, brought about by the increase in Italian domestic demand. To put it simply, in the event of a depreciation of the EUR, the Italian economy would not only suffer higher energy costs (because of the depreciation vis-a-vis OPEC countries), but would also spend in the Eurozone core much of the money it earned in the US, Japan, and the emerging countries, with a net effect likely to be al...
{"title":"The Impact of an Exchange Rate Realignment on the Italian Trade Balance: Euro vs. National Currency","authors":"Alberto Bagnai, C. A. M. Ospina","doi":"10.3790/AEQ.60.4.273","DOIUrl":"https://doi.org/10.3790/AEQ.60.4.273","url":null,"abstract":"Abstract It is frequently claimed that the current EUR/USD exchange rate is too high and that a depreciation of the EUR against the USD would help to relieve the Eurozone economy from its current state of persistent crisis. Evidence provided by the a/simmetrie annual econometric model suggests that this claim is unsupported by the data, at least as far as the Italian economy is concerned. In fact, the size and sign of the trade elasticities show that the increases in net exports towards non-Eurozone countries, brought about by the depreciation of the euro, would be offset by an increase in net imports from Eurozone countries, brought about by the increase in Italian domestic demand. To put it simply, in the event of a depreciation of the EUR, the Italian economy would not only suffer higher energy costs (because of the depreciation vis-a-vis OPEC countries), but would also spend in the Eurozone core much of the money it earned in the US, Japan, and the emerging countries, with a net effect likely to be al...","PeriodicalId":36978,"journal":{"name":"Applied Economics Quarterly","volume":"60 1","pages":"273-291"},"PeriodicalIF":0.0,"publicationDate":"2014-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70167210","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Due to economic and monetary uncertainty individuals are expected to allocate their portfolio towards holding money and alternative forms of assets. Following the literature on money demand, we test the impact of economic and monetary uncertainty on the demand for money in 21 African nations. By relying upon quarterly data, GARCH-based measures of uncertainty, and bounds testing approach we find that the impact of both measures are mostly transitory in many of the African countries and do not last into long run. Furthermore, by including the two uncertainty measures we found that the demand for money in every African nation is stable.
{"title":"Economic Uncertainty, Monetary Uncertainty, and the Demand for Money in Africa","authors":"Mohsen Bahmani‐Oskooee, Alice Kones","doi":"10.3790/aeq.60.4.293","DOIUrl":"https://doi.org/10.3790/aeq.60.4.293","url":null,"abstract":"Due to economic and monetary uncertainty individuals are expected to allocate their portfolio towards holding money and alternative forms of assets. Following the literature on money demand, we test the impact of economic and monetary uncertainty on the demand for money in 21 African nations. By relying upon quarterly data, GARCH-based measures of uncertainty, and bounds testing approach we find that the impact of both measures are mostly transitory in many of the African countries and do not last into long run. Furthermore, by including the two uncertainty measures we found that the demand for money in every African nation is stable.","PeriodicalId":36978,"journal":{"name":"Applied Economics Quarterly","volume":"67 1","pages":"293-313"},"PeriodicalIF":0.0,"publicationDate":"2014-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70167273","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The agricultural and resources sectors are key contributors to the Australian economy, but the carbon tax policy introduced in July 2012 has triggered substantial fear in these sectors. By employing a computable general equilibrium (CGE) model and an environmentally-extended Social Accounting Matrix (SAM), this paper simulates the effects of the Australian carbon tax on the agricultural and resources sectors. The modelling results show that a carbon tax of $23 per tonne can cut carbon emission effectively by 70.3 megatonnes or 12% of the emission base. The impact on the macro economy is mild but significant. At macro level, it will cause a 0.57% decrease in real GDP, and a 0.84% decrease in employment. At sector level, all agricultural and resources sectors will be affected negatively but to different degrees. The brown coal sector will be hit most with 25.74% decrease in output, 52.94% decrease in employment and 89.37% decrease in profitability. Conversely, the other resources sectors are only mildly affected. The impact on the agricultural sector is comparable to that on the non-energy mineral sector.
{"title":"The Australian Agricultural and Resources Sectors under the Carbon Tax: A CGE Perspective","authors":"Xianming Meng","doi":"10.3790/AEQ.60.1.1","DOIUrl":"https://doi.org/10.3790/AEQ.60.1.1","url":null,"abstract":"The agricultural and resources sectors are key contributors to the Australian economy, but the carbon tax policy introduced in July 2012 has triggered substantial fear in these sectors. By employing a computable general equilibrium (CGE) model and an environmentally-extended Social Accounting Matrix (SAM), this paper simulates the effects of the Australian carbon tax on the agricultural and resources sectors. The modelling results show that a carbon tax of $23 per tonne can cut carbon emission effectively by 70.3 megatonnes or 12% of the emission base. The impact on the macro economy is mild but significant. At macro level, it will cause a 0.57% decrease in real GDP, and a 0.84% decrease in employment. At sector level, all agricultural and resources sectors will be affected negatively but to different degrees. The brown coal sector will be hit most with 25.74% decrease in output, 52.94% decrease in employment and 89.37% decrease in profitability. Conversely, the other resources sectors are only mildly affected. The impact on the agricultural sector is comparable to that on the non-energy mineral sector.","PeriodicalId":36978,"journal":{"name":"Applied Economics Quarterly","volume":"60 1","pages":"1-22"},"PeriodicalIF":0.0,"publicationDate":"2014-10-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70166117","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article presents a simplified scheme of the euro crisis, suggesting that there are at least three areas of imbalances in the EMU: fiscal, current account and banking imbalances. The article analyses in which way these areas of imbalances are intertwined and, on aggregate, lead to lower growth across the currency union. By going through the fiscal, current account and banking imbalances in more detail, we find that the political focus of both structural adjustment and institutional reform has shifted from ‘fiscal union’ to ‘banking union’, while rebalancing of current accounts is well underway. Higher inflation, especially in core countries, would be helpful to soften deflation risks of rebalancing, in our view.
{"title":"Rebalancing Europe: Mission Half Accomplished, at Best","authors":"Martin Lück","doi":"10.3790/AEQ.60.1.75","DOIUrl":"https://doi.org/10.3790/AEQ.60.1.75","url":null,"abstract":"This article presents a simplified scheme of the euro crisis, suggesting that there are at least three areas of imbalances in the EMU: fiscal, current account and banking imbalances. The article analyses in which way these areas of imbalances are intertwined and, on aggregate, lead to lower growth across the currency union. By going through the fiscal, current account and banking imbalances in more detail, we find that the political focus of both structural adjustment and institutional reform has shifted from ‘fiscal union’ to ‘banking union’, while rebalancing of current accounts is well underway. Higher inflation, especially in core countries, would be helpful to soften deflation risks of rebalancing, in our view.","PeriodicalId":36978,"journal":{"name":"Applied Economics Quarterly","volume":"68 1","pages":"75-90"},"PeriodicalIF":0.0,"publicationDate":"2014-10-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"70166726","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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