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Article
Publication date: 1 February 2015

Rahul Arora, Sarbjit Singh and Somesh K. Mathur

The present study is an attempt to evaluate the impact of the proposed India-China free trade agreement (FTA) in goods trade on both countries under a static general equilibrium…

Abstract

Purpose

The present study is an attempt to evaluate the impact of the proposed India-China free trade agreement (FTA) in goods trade on both countries under a static general equilibrium framework.

Design/Methodology/Approach

The study has utilized the Global Trade Analysis Project (GTAP) model of world trade with the presence of skilled and unskilled unemployment in the world. For analysis purposes, 57 GTAP sectors, representing the whole regional economy, have been aggregated into 43 sectors and 140 GTAP regions, representing the whole world, have been aggregated into 19 regions. The study has also used the updated tariff rates provided by the World Trade Organization for better results.

Findings

The preliminary analysis using trade indicators depicted that by utilizing their own comparative advantage, both of the countries can maximize their gains by exporting more to the world. The simulation results from the GTAP analysis revealed that a tariff reduction in all goods trade would be more beneficial for both the countries than the tariff reduction in each other's specialized products. All other regions lose in terms of shifting the Indian imports towards China in a post-simulation environment. Regions with a significant loss are: the European Union (28 members), Southeast Asia, the Unites States, Japan, Korea, West Asia, and the European Free Trade Association (EFTA).

Originality/Value

The disaggregated sector-wise analysis has been performed using the latest available GTAP database, version 9.

Details

Journal of Centrum Cathedra: The Business and Economics Research Journal, vol. 8 no. 2
Type: Research Article
ISSN: 1851-6599

Keywords

Article
Publication date: 6 November 2023

Luccas Assis Attílio

This article analyzes the impact of monetary policy on income inequality across 16 advanced economies. The author investigates three key points: (1) the relationship between…

Abstract

Purpose

This article analyzes the impact of monetary policy on income inequality across 16 advanced economies. The author investigates three key points: (1) the relationship between domestic monetary policy and domestic income inequality, (2) the spillover effect of USA monetary policy (including quantitative easing) on international inequality and (3) the quantitative influence of the monetary policies of both the USA and the Eurozone on the formation of domestic income inequalities.

Design/methodology/approach

The author employed the Global Vector Autoregressive (GVAR) model, which uses Vector Autoregressive with Exogenous Variables (VARXs) models of each economy to build an integrated system that enables us to evaluate individual responses to global shocks.

Findings

The author's analysis reveals that (1) contractionary monetary policy exacerbates domestic inequality and (2) USA monetary policy, including quantitative easing, affects international inequality. Furthermore, the author's variance decomposition analysis highlights that USA monetary policy is especially influential on income inequality in Norway and Sweden. Additionally, the cointegrating analysis confirms that monetary policy's impact on inequality persists in the long term.

Originality/value

Most of the studies focused on investigating domestic economies as closed economies. However, the author's approach differs in that the author uses the GVAR, which treats all economies as open. This allows us to incorporate the world economy into the domestic dynamics and connect the economies using bilateral trade. Another advantage of the GVAR is that it captures spillover effects by modeling each economy and constructing the international economy.

Details

Journal of Economic Studies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0144-3585

Keywords

Open Access
Article
Publication date: 11 October 2023

Nikhil Kumar Kanodia, Dipti Ranjan Mohapatra and Pratap Ranjan Jena

Economic literature highlights both positive and negative impact of FDI on economic growth. The purpose of this study is to confirm the relationship between various economic…

Abstract

Purpose

Economic literature highlights both positive and negative impact of FDI on economic growth. The purpose of this study is to confirm the relationship between various economic factors and FDI equity inflows and find out deviations, if any. This is investigated using standard time-series econometric models. The long and short run relationship is inquired with respect to market size, inflation rate, level of infrastructure, domestic investment and openness to trade. The choice of variables for Indian economy is purely based on empirical observations obtained from scientific literature review.

Design/methodology/approach

The study involves application of autoregressive distributive lag (ARDL) model to investigate the relationship. The long run co-integration between FDI and economic growth is tested by Pesaran ARDL model. The stationarity of data is tested by augmented Dickey Fuller test and Phillip–Perron unit root test. Error correction model is applied to study the short run relationship using Johansen’s vector error correction model method besides other tests.

Findings

The results show that the domestic investment, inflation rate, level of infrastructure and trade openness influence inward FDI flows. These factors have both long and short-term relationship with FDI inflows. However, market size is insignificant in influencing the foreign investments inflows. There lies an inverse relation between FDI and inflation rate.

Originality/value

To the best of the authors’ knowledge, the study is original. The methodology and interpretation of results are distinct and different from other similar studies.

Details

Vilakshan - XIMB Journal of Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0973-1954

Keywords

Book part
Publication date: 18 January 2022

Chrystalleni Aristidou, Kevin Lee and Kalvinder Shields

A novel approach to modeling exchange rates is presented based on a set of models distinguished by the drivers of the rate and regime duration. The models are combined into a…

Abstract

A novel approach to modeling exchange rates is presented based on a set of models distinguished by the drivers of the rate and regime duration. The models are combined into a “meta model” using model averaging and non-nested hypothesis-testing techniques. The meta model accommodates periods of stability and slowly evolving or abruptly changing regimes involving multiple drivers. Estimated meta models for five exchange rates provide a compelling characterization of their determination over the last 40 years or so, identifying “phases” during which the influences from policy and financial market responses to news succumb to equilibrating macroeconomic pressures and vice versa.

Details

Essays in Honor of M. Hashem Pesaran: Prediction and Macro Modeling
Type: Book
ISBN: 978-1-80262-062-7

Keywords

Article
Publication date: 9 January 2023

Hardik Marfatia

Financial market holds superior information that can give insights into the future trajectory of economic growth. Further, identifying sectors that hold the key to future economic…

Abstract

Purpose

Financial market holds superior information that can give insights into the future trajectory of economic growth. Further, identifying sectors that hold the key to future economic growth is important for all economies, but particularly relevant to emerging markets. However, unlike existing studies, the paper provides new insights into the forward-oriented nexus between financial markets and economic growth.

Design/methodology/approach

This paper takes a forward-looking approach of using financial market information to predict future economic growth. The authors use ARDL modeling approach to predict economic growth using the information from stock market sectoral returns.

Findings

The authors find that sectoral stock returns significantly improve economic growth forecasts. However, the forecasting superiority is not uniform across sectors and horizons. Auto, consumers' spending, materials and realty sectors provide the most forecasting gains. In contrast, banking, capital goods and industrial sectors provide superior forecasts, but only at horizons beyond one year. The authors also find that the forecast superiority of sectors at longer horizons is inversely related to volatility.

Research limitations/implications

Research highlights the need for sector-focused policy actions in driving economic growth. Further, the findings of the paper identify sectors that drive short-, medium- and long-term economic growth.

Practical implications

There is a significant heterogeneity among different sectors and across horizons in predicting economic growth. Results suggest that targeted policy actions in sectors like materials, metals, oil and gas, and realty are key in driving economic growth. Further, policies geared toward the grassroots industries are at least as beneficial as the large-scale industries. Evidence also suggests the need for an active fiscal policy to address infrastructural bottlenecks in primary industries like basic materials and energy. Evidence nevertheless does not undermine the role of monetary policy actions.

Originality/value

Unlike any paper till date, the innovation of the paper is that it takes an ARDL modeling approach to measure stock market sectoral returns' ability to forecast economic growth several months ahead in the future. Though the paper considers the Indian case, the innovation and contribution extents to the entire field of economic studies.

Details

Journal of Economic Studies, vol. 50 no. 7
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 10 November 2020

Ana María Vallina-Hernandez, Hanns de la Fuente-Mella and Rodrigo Fuentes-Solís

The purpose of this paper is to compare and contrast the international trade characteristics of commerce between Latin American countries and some of the top economies in the…

Abstract

Purpose

The purpose of this paper is to compare and contrast the international trade characteristics of commerce between Latin American countries and some of the top economies in the world, in order to identify new business opportunities for LATAM firms in dynamical external markets.

Design/methodology/approach

A triple indexed gravity model, correcting with robust standardized errors clustered, and a panel data analysis was used to obtain the relationship between Latin American countries and advanced and other emerging economies.

Findings

The main finding of this paper is that innovation overcomes gravity effects and parameters typical of a knowledge society are the significant ones to explain trade among different regions. The model that includes an innovation proxy accommodates with the new international theories of trade. Besides, communication capacity is essential to reach consumers abroad with newer and more complex products. Moreover, the constant is significant when innovation is included, which may imply intersectoral trade that behaves relatively stable in bilateral trade.

Practical implications

The findings suggest that the economies that have some relevance in trade, have increasing numbers regarding patents. Thus, the empirical findings relate to the theoretical models which state that comparative advantages may be dynamic due to technological innovation.

Originality/value

This paper shows that innovation is a central parameter to engage in intratrade and develop a knowledge-based economy. Latin America sometimes appears to be a puzzle as to how to improve its economic performance and overcome its social and economic problems. Intratrade seems to be the route to increase Latin American business participation in world trade.

Objetivo

El propósito de este documento es comparar y contrastar las características comerciales internacionales del comercio entre los países latinoamericanos y algunas de las principales economías del mundo, con el fin de identificar nuevas oportunidades de negocios para las empresas de LATAM en mercados externos dinámicos.

Diseño/metodología/enfoque

Se utilizó un modelo de gravedad triple indexado el que se corrigió con errores robustos estandarizados clusterizados, y un análisis de datos de panel para obtener la relación entre los países latinoamericanos y las economías avanzadas y otras economías emergentes.

Resultados

Uno de los principales hallazgos es que la incorporación de la innovación en el modelo anula el efecto de las variables típicas asociadas a la gravedad. Por lo que se podría suponer que, los parámetros propios de una sociedad del conocimiento son más importantes para explicar el comercio entre las diferentes regiones. El modelo incluye un variable de innovación que se adapta a las nuevas teorías internacionales del comercio. Otro hallazgo es que la capacidad de comunicación es esencial para llegar a los consumidores en el extranjero con productos más nuevos y complejos. Por último, la constante es significativa cuando se incluye la innovación, lo que podría implicar un comercio intersectorial que se comporta relativamente estable en el comercio bilateral.

Limitaciones de la investigación/implicaciones

Los resultados sugieren que las economías que tienen cierta relevancia en el comercio poseen un número creciente de patentes. Por lo tanto, los hallazgos empíricos se relacionan con los modelos teóricos que establecen que las ventajas comparativas pueden ser dinámicas debido a la innovación tecnológica.

Originalidad/valor

Este documento muestra que la innovación es un elemento central para participar en el comercio interno y desarrollar una economía basada en el conocimiento. América Latina a veces parece ser un enigma sobre cómo mejorar su desempeño económico y superar sus problemas sociales y económicos. El comercio intraindustrial parece ser la ruta para aumentar la participación empresarial de América Latina en el comercio mundial.

Details

Academia Revista Latinoamericana de Administración, vol. 33 no. 3/4
Type: Research Article
ISSN: 1012-8255

Keywords

Article
Publication date: 7 April 2015

Musibau Adetunji Babatunde

This study aims to examine the relationship between the oil price and the exchange rate for Nigeria between January 1997 and December 2012. Previous empirical studies revealed an…

1629

Abstract

Purpose

This study aims to examine the relationship between the oil price and the exchange rate for Nigeria between January 1997 and December 2012. Previous empirical studies revealed an ambiguous relationship between crude oil prices and exchange rates, a reason for exploring the differential effects of positive and negative oil price shocks on the exchange rate.

Design/methodology/approach

Time series and structural analysis were used.

Findings

The findings indicate different responses for the exchange rate with respect to positive and negative oil price shocks. Positive oil price shocks were found to depreciate the exchange rate, whereas negative oil price shocks appreciate the exchange rate. In addition, the asymmetric effects of positive and negative oil price shocks on the real exchange rate were not supported by the statistical evidences. The empirical results were robust to different specifications.

Originality/value

To the best of the authors’ knowledge, this is the first paper to assess the differential impact of positive and negative oil price shocks and the role of oil prices in predicting the exchange rate over long horizons in Nigeria.

Details

International Journal of Energy Sector Management, vol. 9 no. 1
Type: Research Article
ISSN: 1750-6220

Keywords

Open Access
Article
Publication date: 25 March 2020

Agwu Sunday Okoro, Augustine Ujunwa, Farida Umar and Angela Ukemenam

This paper examines the impact of regional and non-regional trade on economic growth using annual data from Economic Community of West African States (ECOWAS) member countries for…

3852

Abstract

Purpose

This paper examines the impact of regional and non-regional trade on economic growth using annual data from Economic Community of West African States (ECOWAS) member countries for the period 2007 to 2017.

Design/methodology/approach

Trade data were decomposed into regional (trade among ECOWAS Member States) and non-regional (trade between ECOWAS Member States and the rest of the world). We used the dynamic system GMM to estimate the models and introduced exchange rate, unemployment rate, population growth and gross capital formation as controlled variables.

Findings

The results revealed that the estimated coefficient of ECOWAS regional trade is statistically significant and positive in predicting growth, while the non-regional trade coefficient is negative and not statistically significant in predicting growth. Other predictors of growth introduced into the model as controlled variables, such as exchange rate, unemployment rate, population growth and gross capital formation, displayed mixed results. More importantly, population growth, unemployment and exchange rate depreciation hurt economic growth, while gross capital formation promotes economic growth.

Practical implications

The findings provide strong support in favour of the Krugman (1991) hypothesis that regional trade agreements (RTAs) are a better alternative to global trade.

Originality/value

Our decision to disaggregate ECOWAS trade is unique and influenced largely by the objective of the study, which is to establish the type of ECOWAS trade that is a good predictor of growth. The evidence from our findings support the theory that RTAs are a better catalyst to economic growth.

Details

Journal of Economics and Development, vol. 22 no. 1
Type: Research Article
ISSN: 1859-0020

Keywords

Book part
Publication date: 26 April 2014

Panayiotis F. Diamandis, Anastassios A. Drakos and Georgios P. Kouretas

The purpose of this paper is to provide an extensive review of the monetary model of exchange rate determination which is the main theoretical framework on analyzing exchange rate…

Abstract

Purpose

The purpose of this paper is to provide an extensive review of the monetary model of exchange rate determination which is the main theoretical framework on analyzing exchange rate behavior over the last 40 years. Furthermore, we test the flexible price monetarist variant and the sticky price Keynesian variant of the monetary model. We conduct our analysis employing a sample of 14 advanced economies using annual data spanning the period 1880–2012.

Design/methodology/approach

The theoretical background of the paper relies on the monetary model to the exchange rate determination. We provide a thorough econometric analysis using a battery of unit root and cointegration testing techniques. We test the price-flexible monetarist version and the sticky-price version of the model using annual data from 1880 to 2012 for a group of industrialized countries.

Findings

We provide strong evidence of the existence of a nonlinear relationship between exchange rates and fundamentals. Therefore, we model the time-varying nature of this relationship by allowing for Markov regime switches for the exchange rate regimes. Modeling exchange rates within this context can be motivated by the fact that the change in regime should be considered as a random event and not predictable. These results show that linearity is rejected in favor of an MS-VECM specification which forms statistically an adequate representation of the data. Two regimes are implied by the model; the one of the estimated regimes describes the monetary model whereas the other matches in most cases the constant coefficient model with wrong signs. Furthermore it is shown that depending on the nominal exchange rate regime in operation, the adjustment to the long run implied by the monetary model of the exchange rate determination came either from the exchange rate or from the monetary fundamentals. Moreover, based on a Regime Classification Measure, we showed that our chosen Markov-switching specification performed well in distinguishing between the two regimes for all cases. Finally, it is shown that fundamentals are not only significant within each regime but are also significant for the switches between the two regimes.

Practical implications

The results are of interest to practitioners and policy makers since understanding the evolution and determination of exchange rates is of crucial importance. Furthermore, our results are linked to forecasting performance of exchange rate models.

Originality/value

The present analysis extends previous analyses on exchange rate determination and it provides further support in favor of the monetary model as a long-run framework to understand the evolution of exchange rates.

Details

Macroeconomic Analysis and International Finance
Type: Book
ISBN: 978-1-78350-756-6

Keywords

Article
Publication date: 31 July 2019

Seoung-Wook Whang, Kenneth Sungho Park and Sangyong Kim

The purpose of this paper is to identify the critical success factors (CSFs) to implement integrated project delivery (IPD) systems in the Korean construction industry.

Abstract

Purpose

The purpose of this paper is to identify the critical success factors (CSFs) to implement integrated project delivery (IPD) systems in the Korean construction industry.

Design/methodology/approach

This study categorized potential CSFs and analyzed them using factor analysis and multiple regression analysis to choose the best ones based on responses from Korean construction experts.

Findings

In total, 29 potential factors were selected and categorized into 7 CSFs using factor analysis.

Originality/value

The outcomes of the study are useful as a reference for applying the IPD system in different developing countries and mid-sized construction industries.

Details

Engineering, Construction and Architectural Management, vol. 26 no. 10
Type: Research Article
ISSN: 0969-9988

Keywords

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