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1 – 10 of 246Bernard Njindan Iyke and Nicholas M. Odhiambo
The purpose of this paper is to examine the validity of the purchasing power parity (PPP) hypothesis for two Southern African countries, namely: Lesotho and Zambia.
Abstract
Purpose
The purpose of this paper is to examine the validity of the purchasing power parity (PPP) hypothesis for two Southern African countries, namely: Lesotho and Zambia.
Design/methodology/approach
The authors utilized four econometric tests to examine the existence of the PPP hypothesis in Lesotho and Zambia. These tests include two unit root tests without structural breaks – the Dickey-Fuller generalized least squares (DF-GLS) test and the Ng-Perron test; and two unit root tests with structural breaks – the Perron test and the Zivot-Andrews test. The authors’ empirical analysis is based on an annual data set with varying time periods. The sample period spanned 1960-2010 and 1955-2010, for Lesotho and Zambia, respectively.
Findings
The authors found that the PPP hypothesis was supported in the case of Lesotho, but rejected in the case of Zambia.
Originality/value
This paper is the first to simultaneously explore the exchange rate policies, trends, and the PPP for these two countries. The implication of this finding is that Lesotho is unlikely to profit immensely from trade and investment arbitrages; whereas Zambia is more likely to profit immensely from trade and investment arbitrage by trading with the USA. Moreover, the authors’ findings indicate that the PPP doctrine may be a useful guide for the exchange rate and other macroeconomic adjustment policies in Lesotho but not in Zambia.
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Chandrima Chakraborty and Anindita Jana
The present study deals with the growth performance of export (X), import (M), and economic growth (Y) in India over the period 1970–1971 to 2016–2017 as well as tariff (TR) for…
Abstract
The present study deals with the growth performance of export (X), import (M), and economic growth (Y) in India over the period 1970–1971 to 2016–2017 as well as tariff (TR) for the period 1990–2017 by employing the methodology of one-time endogenous structural break suggested by Zivot and Andrews (1992). Also, an attempt has been taken to examine the direction of causality between the above-mentioned trade-related variables and economic growth using Granger Causality Test. Results of estimation reveal that all the variables converge toward a stationarity process having constant variability overtime. There exists structural break in the year 1996, 2006, 2008, and 2010, respectively, for economic growth, tariff, imports, and exports. Bidirectional causality is found running from economic growth to tariff and from tariff to economic growth. But there is unidirectional causality from imports to tariff, imports to exports and from exports to tariff.
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This paper analyzes the impact of macroeconomic variables such as real exchange rate, exchange-rate volatility, and economic growth of the UK and Norway on Norway’s bilateral…
Abstract
This paper analyzes the impact of macroeconomic variables such as real exchange rate, exchange-rate volatility, and economic growth of the UK and Norway on Norway’s bilateral trade flow to the UK via maritime and other transport modes. The first two models considered trade volume (import and export) via only maritime transport, while the third and fourth models considered trade volume via modes other than maritime transport. The empirical validity of the Marshall-Lerner condition is tested to see whether a devaluation of the real exchange rate improves the trade balance in the long term. In addition to the long-term relationship among variables, short-term effects are also evaluated. The results show that the real income of Norway and its trading partner (the UK) is the main determinant of bilateral trade flow via maritime and other transport modes. Moreover, the results indicate that in the long run, the Marshall-Lerner condition is satisfied only for bilateral trade via modes other than maritime transport.
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Berna Kaçar and Huriye Gonca Diler
Introduction: Monetary policy resolutions issued by central banks play effective role in economy when accompanied with interest variable. In Keynesian approach to finance…
Abstract
Introduction: Monetary policy resolutions issued by central banks play effective role in economy when accompanied with interest variable. In Keynesian approach to finance, interest is treated as the main determinant underlying financial policy resolutions. Thus interest is a pivotal factor in monetary transmission mechanism. Tight monetary policy practices, essentially decreasing money supply, eventually lead to a slump in investments, total demand and national income due to the increase in real interest rates.
Objective: The aim of this study is to determine what type of effects do monetary policy practitioner in Turkey have on macroeconomic variables via the interest channel of monetary transmission mechanism.
Methodology: Based on this objective, variables that could help in unveiling CBT overnight interest rates, direct fixed capital investment (GSSO), real gross domestic product (RGDP), industry production index (SUE) and domestic producer price index (YUFE) variables and that could explain monetary functions of transmission mechanism’s interest channel were selected. For the variables constituting the research topic, collected data belong the period of 2003Q1–2018Q3.
Findings: In the study relation between the variables has been analyzed under two parts via harnessing Toda–Yamamoto casualty test. In the first part, results of Toda–Yamamoto causality test from RGDP, GSSO and interest rate (FO) variables have been presented. The results manifest that interest channel directly affects direct fixed capital investment and RGDP. Interest channel was found to be effective on these variables of the analysis. In the second part, Toda–Yamamoto causality test was harnessed for SUE, YUFE and FO variables. Interest channel did not provide a result that affected YUFE and SUE.
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The Saint Valentine's Decree (1984) and the ensuing hard‐fought referendum (1985), which reduced the automatisms of scala mobile, started a process of redefinition of wage fixing…
Abstract
Purpose
The Saint Valentine's Decree (1984) and the ensuing hard‐fought referendum (1985), which reduced the automatisms of scala mobile, started a process of redefinition of wage fixing in Italy, which culminated with the final abolition of scala mobile (1992) and the approval of Protocollo d'intesa (1993). Since then, following new corporatist principles, a national system of centralised wage bargaining (concertazione) and so‐called “institutional indexation” have governed the determination of wages. Does incomes policy generate greater coordination in the process of wage formation? Does it cause greater co‐movement of wages, prices, labour productivity and unemployment? This paper aims to answer these questions with reference to one of the G8 economies.
Design/methodology/approach
After testing for unit root each component by using the ADF, Phillips and Perron, DF‐GLS and Zivot and Andrews statistics, the paper tests for co‐integration the so‐called WPYE model using different methods. The Engle and Granger approach is used to assess the impact of incomes policy on the speed of adjustment of real wages, productivity (and unemployment) to their equilibrium value, while the Gregory and Hansen procedure serves as a means to endogenously detect the presence of a regime shift. The paper estimates coefficients before and after the structural break.
Findings
Incomes policy based on the 1993 Protocol has caused a regime shift in the process of wage determination. The long‐run estimates of the WPYE model do not generate stationary residuals except when a dummy for 1993 is added. The share of wages over GDP reduces by about ten percentage points in the early 1990s and has stood at about 57 per cent since 1995. The link with productivity is close to one‐to‐one only before the break. The feedback mechanism, as measured by the coefficient of lagged residuals in short‐run estimates, is increased from −0.46 in the pre‐reform to −0.79 in the post‐reform period, suggesting that incomes policy has increased real wage flexibility indeed. In recent years the link between real wages and (very low) labour productivity growth has weakened. In a sense, incomes policy has introduced a new form of (upward) wage rigidity. Last but not least, incomes policy has changed the correlation with the unemployment rate from positive to not statistically significant.
Research limitations/implications
Future developments will focus on disentangling the impact of incomes policy vis‐à‐vis other policy interventions on WPYE and on unemployment.
Practical implications
The analysis calls for a careful revision of the 1993 Protocol aimed at better protecting the purchasing power of real wages without losing control on inflation, and introducing growth‐generating mechanisms.
Originality/value
The paper studies the impact of incomes policy on WPYE and the Phillips curve by means of co‐integration and structural break analysis. It proposes to interpret the effect of incomes policy on the Phillips curve as changing the coefficient of the error correction mechanism that leads real wages to their long‐run equilibrium value.
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The main purpose of this study is to investigate the impact of housing price on mortgage debt accumulation while considering the structural break effects associated with the…
Abstract
Purpose
The main purpose of this study is to investigate the impact of housing price on mortgage debt accumulation while considering the structural break effects associated with the Global Financial Crisis (GFC).
Design/methodology/approach
To determine the existence of a long run relationship among the variables, this study used a Johansen cointegration test. The long run model was then estimated using the fully modified ordinary least square method and reported for both the model with and without a structural break associated with the GFC.
Findings
The findings demonstrate a moderate positive relationship between housing price and mortgage debt, with the impact of the GFC is positive but insignificant. The household’s lack of responsiveness to the GFC may be attributed to their optimistic expectations and confidence in the Malaysian housing market.
Practical implications
Findings of this study provide some guidance to policymakers and the banking sector in predicting household borrowing behavior during future economic crises.
Originality/value
The increase in housing prices and mortgage debt after the GFC has been a concern for many countries, including Malaysia. This study contributes to the literature by investigating the relationship between housing prices and mortgage debt in Malaysia and sheds light on the impact of the GFC on household borrowing behavior. The study’s contributions include providing new evidence to the underexplored topic, enhancing the robustness and reliability of the empirical results and providing insights into the importance of testing for structural breaks in time series analysis.
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Durmus Çagri Yildirim, Seyfettin Erdogan, Seda Yildirim and Hamit Can
The purpose of this study is to investigate the effect of the Trans-Anatolian Natural Gas Pipeline Project (TANAP) on industrial production in Turkey. The TANAP is a project which…
Abstract
Purpose
The purpose of this study is to investigate the effect of the Trans-Anatolian Natural Gas Pipeline Project (TANAP) on industrial production in Turkey. The TANAP is a project which ensures the security of the country’s natural gas supply and encourages a decrease in energy prices. So, this study investigates TANAP’s efforts to decrease gas prices, as well as the effects of gas prices on industrial production.
Design/methodology/approach
The data include gas prices and industrial production index series. Gas prices are approached for industrial users (nonresidential) in Turkey and industrial production index series have been discussed for whole industries. The Johansen cointegration method has been used to analyze the data, spanning the period from 2005M01 to 2015M11.
Findings
Results indicate that the decrease in the energy prices has a positive effect on the industrial production index, which is accepted as a basic sign of economic growth. Accordingly, it has been proved that gas priced had a significant effect on industrial production in Turkish economy during the respective periods.
Research limitations/implications
This study has supported the argument that TANAP helps to decrease gas prices in Turkey. It can be said that a decrease in gas price is expected to have positive effect on industrial production in the long-term.
Originality/value
The present study shows that projects such as TANAP can help gas importing countries like Turkey to decrease gas prices and increase industrial production. In this context, this study supports projects that decreasing gas prices for energy importing countries in the long term.
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The purpose of this study is to analyze the determinants of changes in carbon dioxide (CO2) emissions for Turkey by utilizing the autoregressive distributed lag approach to…
Abstract
Purpose
The purpose of this study is to analyze the determinants of changes in carbon dioxide (CO2) emissions for Turkey by utilizing the autoregressive distributed lag approach to investigate the long-run equilibrium relationships of CO2 emissions between foreign tourist arrivals (FTAs) and electricity consumption (ELC). The results reveal that foreign tourists and ELC are significant determinants of a long-run equilibrium relationship with CO2 emissions from electricity and heat production and CO2 emissions from transport for Turkey, respectively. The results of the conditional error correction models (CECM) confirm that there are long-run causal relationships from the growing number of foreign tourist arrivals and the increase of ELC toward the growth of CO2 emissions during 1960-2010. The results of autoregressive distributed lag (ARDL) error correction models for CO2 emissions also validate significant dynamic relationships between CO2 emissions, ELC and tourist arrivals in the short run.
Design/methodology/approach
ARDL modeling and Bounds test approach were used in this study.
Findings
Rapid tourism development in Turkey has triggered CO2 emissions. The growth of CO2 emissions in Turkey threatens sustainability. The hypothesis of “The growth of CO2 emissions in Turkey” is validated. Tourist arrivals, ELC and CO2 emissions are co-integrated. CECMs confirm the growth of CO2 emissions during 1960-2010. ARDL modeling shows significant relationships between CO2 emissions and other variables.
Originality/value
Results of ARDL error correction models for CO2 emissions validate the hypothesis that there are significant dynamic relationships between CO2 emissions, ELC and tourist arrivals in Turkey for the short run.
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Javaid Ahmad Dar and Mohammad Asif
The purpose of this paper is to investigate the long-run effect of financial sector development, energy use and economic growth on carbon emissions for Turkey, in presence of…
Abstract
Purpose
The purpose of this paper is to investigate the long-run effect of financial sector development, energy use and economic growth on carbon emissions for Turkey, in presence of possible regime shifts over a period of 1960-2013.
Design/methodology/approach
Along with the conventional unit root tests, Zivot-Andrews unit root test with structural break has been employed to check the stationarity of variables. The cointegrating relationship between variables is investigated by using the autoregressive distributed lag bounds test and Hatemi-J threshold cointegration test.
Findings
The results confirm a cointegrating relationship between the variables. The long-run relationship between the variables has gone through two endogenous structural breaks in 1976 and 1986. Development of financial sector improves environmental quality whereas energy use and economic growth degrade it. The results challenge the validity of environmental Kuznets curve hypothesis in Turkish economy.
Research limitations/implications
The study uses domestic credit to private sector as a proxy for development of financial sector. The model can be improved by constructing an index of financial development instead of using a single determinant as a proxy for financial development.
Practical implications
The study may pave the way for policy makers to capture important environmental pollutants in better way and develop effective and efficient energy and economic policies. This may make significant contribution to curbing CO2 emissions while sustaining economic growth.
Originality/value
This is the only study to examine long-run impact of financial sector development on carbon emissions, using the threshold cointegration approach. Hence, the study is a gentle request to reduce the possible omitted variable econometric estimation bias and fill the gap in the existing literature.
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