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This paper aims to investigate markets’ integration using the capital enhanced equilibrium exchange rate (CHEER) model for seven, highly competitive, East Asian countries.
Abstract
Purpose
This paper aims to investigate markets’ integration using the capital enhanced equilibrium exchange rate (CHEER) model for seven, highly competitive, East Asian countries.
Design/methodology/approach
The sample consists of monthly observations, whereas unit root and cointegration techniques with structural shifts have been used.
Findings
The evidence shows that the weak form of the CHEER approach holds for Malaysia and Thailand. For China, Japan, Korea, Singapore and Taipei, only the uncovered interest parity condition is validated, implying capital markets integration. In contrast, for these five countries, the results indicate absence of goods’ markets integration. This outcome can be attributed to the impact of quite high non-tariff barriers and the Balassa–Samuelson effect.
Originality/value
To the best of the author’s knowledge, this is the first study that investigate markets’ integration in several East Asian economies, using the CHEER approach and more accurate price indices.
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Iman Cheratian and Saleh Goltabar
This paper aims to investigate the stationary properties of entrepreneurship capital in the Iranian business sector. The investigation is conducted based on firm size (micro…
Abstract
Purpose
This paper aims to investigate the stationary properties of entrepreneurship capital in the Iranian business sector. The investigation is conducted based on firm size (micro, small and medium, and large), sector (ISIC classification), and location (23 provinces) over the period 1981–2021.
Design/methodology/approach
To achieve the purpose of the paper, we apply the Lagrange Multiplier (LM) unit root test with structural breaks.
Findings
The results of our study confirm the stationarity of entrepreneurship for the majority of our categorizations. Therefore, entrepreneurs' willingness to start a business is temporarily affected by sharp shocks, suggesting that the entrepreneurship trends in these categories will eventually revert to their long-run equilibrium. However, the time series of entrepreneurship in provinces such as Zanjan and Lorestan, as well as in the electrical machines and devices (code 31) sector, remain permanent. These findings can assist policymakers in each sector and location in designing effective policies to promote entrepreneurial activities.
Research limitations/implications
In this study, the time period utilized was restricted, and there were no data accessible for an extended duration. Another limitation of this research is the absence of access to firm-level data on a shorter time scale, such as weekly or monthly.
Originality/value
The economic literature reveals that empirical studies on the persistence of entrepreneurship have received relatively less attention in the context of emerging and resource-based economies, compared to the increasing focus on them in developed countries. Therefore, to address this gap, this paper aims to extend the current empirical literature by presenting new evidence for the case of Iran, which has an emerging and resource-based economy.
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Ghada H. Ashour, Mohamed Noureldin Sayed and Nesrin A. Abbas
This research aims to examine the macro determinants that significantly affect financial development in the Middle East and North Africa (MENA) region, which could be used…
Abstract
Purpose
This research aims to examine the macro determinants that significantly affect financial development in the Middle East and North Africa (MENA) region, which could be used furtherly to play a major role in economic sustainability since one of the major driving forces for economic development is the financial development.
Design/methodology/approach
The significant determinants of financial development should be efficiently used by the MENA region countries for creating huge financial sector development and innovation, stimulating economic development in turn and leading to the completion of the cycle of development and sustainability. To achieve this study's objective, the researcher employed a quantitative method to develop an econometric model.
Findings
This model consisted of two Panel EGLS Cross-Section Random Effects Models (REMs) in which Domestic credit to the private sector as a percentage of GDP (?PCGDP?_it) and stock market capitalization ratio (?SMC?_it) were taken as the dependent variables. In addition, the independent variables included the corruption perception index, financial freedom (FF), political stability (PS) and trade openness (TO). The researcher extracted the data for the analysis from different databases including the World Bank, the Organization for Economic Cooperation and Development and the International Monetary Fund. Throughout the first – Panel EGLS Cross-Section Random Effects Model, it turned out that, while FF, TO and corruption index had a positive relationship with ?PCGDP?_it, PS had an adverse effect on ?PCGDP?_it. The second – Panel EGLS Cross-Section Random Effects Model showed that, while PS and TO had a positive effect on stock market performance, the corruption index and FF had an adverse effect on stock market performance.
Originality/value
Throughout the first – Panel EGLS Cross-Section Random Effects Model, it turned out that, while FF, TO and corruption index had a positive relationship with ?PCGDP?_it, PS had an adverse effect on ?PCGDP?_it. The second – Panel EGLS Cross-Section Random Effects Model showed that, while PS and TO had a positive effect on stock market performance, the corruption index and FF had an adverse effect on stock market performance.
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Ibrahim Cutcu, Guven Atay and Selcuk Gokhan Gerlikhan
This study aims to analyze the relationship between the consequences of the pandemic and the housing sector with econometric tests that allow for structural breaks.
Abstract
Purpose
This study aims to analyze the relationship between the consequences of the pandemic and the housing sector with econometric tests that allow for structural breaks.
Design/methodology/approach
Study data were collected weekly between March 9, 2020, and February 4, 2022, and analyzed for Turkey. In the model of the study, housing loans were used as a housing market indicator, and the number of new deaths and new cases were used as data related to the pandemic. The exchange rate, which affects the use of housing loans, was added to the model as a control variable. This study was analyzed to examine the relationship between the pandemic and the housing sector, time series analysis techniques that allow structural breaks were used.
Findings
Based on the result of the analyses, it was concluded that there is a long-run relationship between the pandemic stages and housing markets along with structural breaks. As a result of the time-varying causality test developed to determine the causality relationship between the variables and its direction, a bidirectional causality relationship was identified between all variables at certain dates.
Research limitations/implications
Study data were collected weekly between March 9, 2020, and February 4, 2022, and analyzed in the case of Turkey.
Practical implications
Based on results of the study, it is recommended that policy makers and market actors take into account extraordinary situations such as pandemics and create a budget allocation that is always ready to use for this purpose.
Originality/value
The empirical examination of the relationship between the pandemic and the housing sector in Turkey provides originality to this study in terms of its topic, sample, methodology, contribution to the literature and potential policy recommendations.
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Olumide Olusegun Olaoye, Mamdouh Abdulaziz Saleh Al-Faryan and Mosab I. Tabash
The objective of the research is threefold. First, the study examines the fiscal policy – income inequality nexus in SA. Second, the study addressed the potential asymmetric…
Abstract
Purpose
The objective of the research is threefold. First, the study examines the fiscal policy – income inequality nexus in SA. Second, the study addressed the potential asymmetric effects in fiscal policy – income inequality nexus in SA (i.e. we assessed the effects of fiscal policy on income inequality at different quantiles of the income inequality) using secondary data from 1980–2020. Third, the study also identifies the optimal fiscal policy instrument that achieve the greatest distributional objectives.
Design/methodology/approach
The study adopts the traditional ordinary least square (OLS) and the innovative Quantile estimation techniques.
Findings
The study found that fiscal policy marginally reduces the income inequality at the lower quantiles (t: 0.05). Specifically, the results show that government spending on health and education reduces income inequality at the lower quantiles (t: 0.05; t: 0.25), albeit exerts a statistically weak impact. On the other hand, the results show that at the upper quantiles, fiscal policy has no statistically significant impact on income inequality. However, we do not find either direct or indirect tax to have any impact on income inequality at any conventional level of significance. This suggests that government spending on health and education have the greater potential to reduce income inequality in South Africa. The research and policy implications are discussed.
Originality/value
The study addressed the asymmetric phenomenon in income inequality-fiscal policy nexus in South Africa.
Peer review
The peer review history for this article is available at: https://publons.com/publon/10.1108/IJSE-12-2023-0956
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Yusuf Ekrem Akbaş, Zafer Dönmez and Esra Can
In this study, it is analyzed the validity of the exchange rate pass-through (ERPT) effect and the effect of interest rate and output level on the inflation rate (IR) in Brazil…
Abstract
Purpose
In this study, it is analyzed the validity of the exchange rate pass-through (ERPT) effect and the effect of interest rate and output level on the inflation rate (IR) in Brazil, Russia, India, China and Turkey (BRIC-T) between the years 1995Q1 and 2022Q4.
Design/methodology/approach
The methods such as the panel unit root test developed by Westerlund (2012), the LM bootstrap panel cointegration test developed by Westerlund and Edgerton (2007), the common correlated effects (CCE) estimator developed by Pesaran (2006) and the augmented mean group (AMG) estimator developed by Eberhardt and Bond (2009) that take into account the cross-section dependency are applied for analysis.
Findings
As a result of the findings, it is determined that the ERPT effect is valid in Turkey, Brazil, Russia, India and China and the cost channel is valid only in China. Finally, it is found out that output level positively affects inflation in Turkey, Brazil, Russia, India and China.
Practical implications
All these results indicate that the economies of Turkey, Russia, Brazil and India have a fragile structure, especially in terms of inflation. Therefore, the central bank of these countries should maintain exchange-rate stability to implement the inflation-targeting strategy successfully. In this context, central bank independence should be increased in these countries in achieving this objective. Also the results indicate that it is still early to consider whether BRIC-T countries and accordingly the Belt and Road Initiative will be an alternative against the domination of the USA and European Union (EU) on international trade system or it will substitute them.
Originality/value
In this study, it is tested that the impact of interest-rate (NIR), exchange-rate (FER) and output level (IPI) on general level of prices. Besides, it is analyzed that whether production level affects the IR. Also, the study investigates the economic issues such as ERPT effect and cost channel. The study analyzes whether China's Belt and Road Initiative is successful or not. In this study, we used the panel data methods that allow for structural breaks and cross-section dependency. For these reasons, this study differs from other studies in the literature both in terms of scope and methods used.
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Patrik Jonsson, Johan Öhlin, Hafez Shurrab, Johan Bystedt, Azam Sheikh Muhammad and Vilhelm Verendel
This study aims to explore and empirically test variables influencing material delivery schedule inaccuracies?
Abstract
Purpose
This study aims to explore and empirically test variables influencing material delivery schedule inaccuracies?
Design/methodology/approach
A mixed-method case approach is applied. Explanatory variables are identified from the literature and explored in a qualitative analysis at an automotive original equipment manufacturer. Using logistic regression and random forest classification models, quantitative data (historical schedule transactions and internal data) enables the testing of the predictive difference of variables under various planning horizons and inaccuracy levels.
Findings
The effects on delivery schedule inaccuracies are contingent on a decoupling point, and a variable may have a combined amplifying (complexity generating) and stabilizing (complexity absorbing) moderating effect. Product complexity variables are significant regardless of the time horizon, and the item’s order life cycle is a significant variable with predictive differences that vary. Decoupling management is identified as a mechanism for generating complexity absorption capabilities contributing to delivery schedule accuracy.
Practical implications
The findings provide guidelines for exploring and finding patterns in specific variables to improve material delivery schedule inaccuracies and input into predictive forecasting models.
Originality/value
The findings contribute to explaining material delivery schedule variations, identifying potential root causes and moderators, empirically testing and validating effects and conceptualizing features that cause and moderate inaccuracies in relation to decoupling management and complexity theory literature?
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Fevzi Ölmez, Emre Bilgiç and Esra Aydın
This research aims to investigate the role of the economic policy uncertainty (EPU) in the outward FDI (OFDI) of the United Kingdom (UK) by considering the institutional quality…
Abstract
Purpose
This research aims to investigate the role of the economic policy uncertainty (EPU) in the outward FDI (OFDI) of the United Kingdom (UK) by considering the institutional quality (IQ) and globalization level of the host country as contextual factors.
Design/methodology/approach
The UK’s OFDI to its twenty partners is analyzed by using the factor augmented model for the 2005–2019 period.
Findings
The results show that the EPU of the host country has a negative and significant effect on the UK's OFDI. Furthermore, the findings surprisingly illustrate that the globalization level of the host country has a negative and significant impact on the UK's OFDI. In terms of IQ, this study indicates that, while government effectiveness and regulatory quality have a negative and significant influence on the UK's OFDI, the rule of law has a positive and significant effect on the UK's OFDI.
Originality/value
This will be one of a few studies considering OFDI in the scope of EPU. Also, the contradicting results of the study add unique perspectives to the literature about the relationship between OFDI, globalization, and IQ.
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Madhabendra Sinha, Samrat Roy and Darius Tirtosuharto
This paper aims to empirically investigate the dynamic interlinkages among globalization, digitalization and economic development in the top 75 most globalized countries from 2000…
Abstract
Purpose
This paper aims to empirically investigate the dynamic interlinkages among globalization, digitalization and economic development in the top 75 most globalized countries from 2000 to 2019. The selection of the 75 most globalized developing countries is based on the overall scores of the KOF Globalization Index (2021).
Design/methodology/approach
The research design is based on secondary data collected from the World Bank (2021), the International Telecommunication Union (2021) and the KOF Globalization Index (2021). The study uses panel unit root tests followed by the panel cointegration techniques. Further, the estimation uses panel fully modified ordinary least squares and panel dynamic ordinary least squares methods.
Findings
The empirical results reveal that the effect of globalization on economic development is sensitive to different estimation procedures; in some cases, but not in every case, the effect is positive and significant. However, the positive and significant effect of digitalization on economic development is robust across all estimated models. Long-run equilibrium relationships and bidirectional causalities strongly affirm the nexus among globalization, digitalization and economic development, substantiating the interconnectedness among 75 developing economies.
Originality/value
The study reinstates that the forces of globalization and digitalization will be instrumental in shaping the selected most globalized economies in the long run. Adopting various econometric methodologies takes care of the time-specific and cross-sectional dynamics, as evident in the panel framework considered in this study. The empirical findings truly ascertain the theoretical synergy among the forces of globalization leading to more digitalization and economic development. This makes the empirical interplay highly conducive to framing long-term policies to expand the information communication network in terms of its access and reach.
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Aliyu Akorede Rufai, Raymond Liambee Aor and Afees Adebare Salisu
This study aims to construct alternative models to establish the dynamic nexus between inflation and housing prices by estimating the short- and long-run relationship between…
Abstract
Purpose
This study aims to construct alternative models to establish the dynamic nexus between inflation and housing prices by estimating the short- and long-run relationship between housing prices and inflation for 15 OECD countries from 1980Q1 to 2022Q4. Furthermore, the authors examined this association using the core and headline inflation and price-income and price-rent ratios as proxies for inflation and housing prices, respectively.
Design/methodology/approach
The authors use the panel autoregressive distributed lag technique to examine the nexus between housing prices and inflation to capture the distinct characteristics of the sample countries, estimate various short-run and long-run dynamics cum separate analyses for turbulent and calm periods in the relationship between housing prices and inflation.
Findings
Changes in housing prices have a greater impact on core inflation than headline inflation. Overall, the authors establish a positive (negative) relationship between housing prices and core inflation in the long run (short run) based on alternative proxies of housing prices. However, this connection tends to be less significant for headline inflation and episodic over smaller samples, as it seems stronger during calm periods than turbulent ones.
Originality/value
To the best of the authors’ knowledge, the authors are the first to examine the association between housing prices and inflation by demonstrating how these variables behave during calm and turbulent periods.
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