Template-Type: ReDIF-Article 1.0 Author-Name: Tong Hun Lee Author-X-Name-First: Tong Hun Author-X-Name-Last: Lee Author-Name: Keun Jon Chung Author-X-Name-First: Keun Jon Author-X-Name-Last: Chung Title: On Measuring The True Cost of Living for the Developing Country: Case of Korea Abstract: In a rapidly developing country without an adequate mortgage market, it is difficult to impute the cost of owning a home and, as a result, this cost is often omitted from the Consumer Price Index (CPI). To resolve this difficulty, by using an intertemporal consumption allocation model, this paper develops a method for deriving the user cost of owner-occupied housing which is in turn incorporated in the so-called True Cost of Living Index (TCLI). When applied to Korea as an example, the statistical results show substantially higher inflation than previously assumed, indicating the importance of homeownership cost in measuring the standard of living for a developing country. Thus, in both theory and practice, our TCLI based on the Diewert-superlative chain index is superior to the conventional fixed weight CPI, indicating its usefulness not just for Korea but also for other countries [C43, D11, O53] Journal: International Economic Journal Pages: 1-14 Issue: 1 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000001 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000001 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:1:p:1-14 Template-Type: ReDIF-Article 1.0 Author-Name: Zhen Zhu Author-X-Name-First: Zhen Author-X-Name-Last: Zhu Title: Dynamic Inconsistency and Exchange-Rate Target Zones: A Welfare Analysis Abstract: This paper examines the welfare implications of different exchange-rate systems, especially an exchange-rate target-zone system, in a context of monetary policy making and dynamic inconsistency. It is shown that when there is uncertainty, there is a trade-off between commitment to a rule and discretion. A free-floating exchange-rate system may have the same loss function values in terms of price and output fluctuations as that of a target zone. However, a target-zone system may be more attractive since there is less exchange-rate fluctuation. Returning to a fixed-rate system may be worse since it may bring about larger welfare losses especially when supply shocks dominate. [F31, E52] Journal: International Economic Journal Pages: 15-38 Issue: 1 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000002 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000002 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:1:p:15-38 Template-Type: ReDIF-Article 1.0 Author-Name: Hassan Shirvani Author-X-Name-First: Hassan Author-X-Name-Last: Shirvani Author-Name: Barry Wilbratte Author-X-Name-First: Barry Author-X-Name-Last: Wilbratte Title: The Relationship Between The Real Exchange Rate and The Trade Balance: An Empirical Reassessment Abstract: This paper presents an empirical reassessment of the relationship between the real exchange rate and the trade balance, using the multivariate cointegration approach. Based on bilateral trade between the U. S. and the other G7 countries, we find evidence that the trade balance is unresponsive to the exchange rate in the very short run but is significantly affected by it within two years. We also find evidence supporting the empirical validity of the Marshall-Lerner condition, indicating that devaluations do improve the trade balance in the long run.[F32] Journal: International Economic Journal Pages: 39-50 Issue: 1 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000003 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000003 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:1:p:39-50 Template-Type: ReDIF-Article 1.0 Author-Name: Imad Moosa Author-X-Name-First: Imad Author-X-Name-Last: Moosa Author-Name: Razzaque Bhatti Author-X-Name-First: Razzaque Author-X-Name-Last: Bhatti Title: Are Asian Markets Integrated? Evidence for Six Countries Vis-A-Vis Japan Abstract: This paper presents some empirical evidence on the degree of integration between the goods and financial markets of Japan and six Asian countries. The evidence is obtained by testing two international parity conditions using unconventional specifications: uncovered interest parity (UIP) and ex ante purchasing power parity (PPP). The results of cointegration tests are strongly supportive of the two conditions over the period 1980-1994. The paper concludes that Asian goods and financial markets have reached a high level of integration. [G14] Journal: International Economic Journal Pages: 51-67 Issue: 1 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000004 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000004 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:1:p:51-67 Template-Type: ReDIF-Article 1.0 Author-Name: Hans-Jurgen Engelbrecht Author-X-Name-First: Hans-Jurgen Author-X-Name-Last: Engelbrecht Title: The Impact of International Trade on Real Wages in U.S. Manufacturing, 1985-1989 Abstract: This study investigates the impact of international trade on real wages earned in U.S. manufacturing during the period 1985-89. Many of the previous studies which try to explain the structure of U.S. industry wages include only the negative impact of increased import penetration, or they exclude international trade variables altogether. In order to obtain a more balanced assessment of trade effects, wage equations including, in turn, an import-, export-, and net trade variable are estimated using a generalised least squares procedure. A parsimonious modelling approach is adopted which focuses on a few catch-all variables instead of the large number of variables used in many micro wage studies. It is found that trade had a positive impact on the average real wage, despite the massive trade deficits during the period. Further analysis suggests that it increased both the competitive wage and the amount of economic rent earned by workers, with the impact on the former being stronger than the impact on the latter. However, other variables, in particular capital intensity, had even stronger positive impacts. [F14] Journal: International Economic Journal Pages: 69-86 Issue: 1 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000005 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000005 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:1:p:69-86 Template-Type: ReDIF-Article 1.0 Author-Name: Yoonbai Kim Author-X-Name-First: Yoonbai Author-X-Name-Last: Kim Title: How Real are Real Exchange Rates? Abstract: This Paper analyzes the role of real disturbances in the real dollar exchange rates of the mark, yen and the pound both during the post-1973 float and in the long-run historical date. The results indicate dominate roles of real shocks in all three exchange rates in the post-1973 float although a substantial portion of short-run variations in the mark and yen contains monetary characteristics. In the long historical date, real shocks are far less important explaining only a small portion of nominal exchange rate movements and 50 to 80 percent of real exchange rate movements. The analysis is based on the Mundell-Fleming-Dornbusch model as the structural model and the multivariate method of time series decomposition to incorporate the long-run invariance of the exchange rate with respect to monetary shocks. [F31, F41] Journal: International Economic Journal Pages: 87-108 Issue: 1 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000006 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000006 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:1:p:87-108 Template-Type: ReDIF-Article 1.0 Author-Name: Mohsen Bahmani-Oskooee Author-X-Name-First: Mohsen Author-X-Name-Last: Bahmani-Oskooee Author-Name: Hyun-Jae Rhee Author-X-Name-First: Hyun-Jae Author-X-Name-Last: Rhee Title: Are Imports and Exports of Korea Cointegrated? Abstract: Few studies have investigated the long-run convergence between imports and exports of a country. This paper investigates the Korean experience and founds that korea's imports and exports are cointegrated. The results indicate that Korea is not in violation of its international budget constraint. [F10] Journal: International Economic Journal Pages: 109-114 Issue: 1 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000007 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000007 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:1:p:109-114 Template-Type: ReDIF-Article 1.0 Author-Name: Howell Zee Author-X-Name-First: Howell Author-X-Name-Last: Zee Title: Endogenous Time Preference and Endogenous Growth Abstract: This paper develops a one-sector aggregate endogenous growth model with intertemporal preference dependence. The resultant model possesses the fundamental property of growth convergence, in the sense that countries with identical parameters regarding technology, preference, and government policy will converge to a steady state with the same (positive) growth rate. A notable tax policy implication of the model is that, even in the absence of externalities, the growth effects of an income tax are shown to be a priori ambiguous and dependent on the relative magnitudes of the tax rate and the tax elasticity of the savings rate. Journal: International Economic Journal Pages: 1-20 Issue: 2 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000008 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000008 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:2:p:1-20 Template-Type: ReDIF-Article 1.0 Author-Name: Anil Lal Author-X-Name-First: Anil Author-X-Name-Last: Lal Title: Import Liberalization, Urban Unemployment, and Capital Mobility: a Welfare Analysis Abstract: This paper examines the issue of import liberalization in the presence of urban unemployment when capital moves freely in and out of the rural area. To this end, the specific-factors version of the Harris-Todaro model is utilized. Formulas for the calculation of the shadow price of foreign exchange and capital are derived under alternative forms of import restrictions. It is shown that, as compared to an initial situation of capital immobility, international capital mobility, induced by reduction in alternative forms of import restrictions into the rural area is welfare enhancing. Journal: International Economic Journal Pages: 21-37 Issue: 2 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000009 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000009 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:2:p:21-37 Template-Type: ReDIF-Article 1.0 Author-Name: Philip Bodman Author-X-Name-First: Philip Author-X-Name-Last: Bodman Title: The Australian Trade Balance and Current Account: a Time Series Perspective Abstract: This paper examines the dynamic relationship between Australian imports and exports in both the short and long-run using recent cointegration and error-correction techniques. The analysis has direct implications over the specification and estimation of Australian import and export functions and resulting elasticity estimates. The paper also addresses the issue of sustainability of persistent current account deficits in the Australian context and provides a test of whether Australia is satisfying its intertemporal (or present value) budget constraint (IBC). Journal: International Economic Journal Pages: 39-57 Issue: 2 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000010 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000010 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:2:p:39-57 Template-Type: ReDIF-Article 1.0 Author-Name: Farrokh Nourzad Author-X-Name-First: Farrokh Author-X-Name-Last: Nourzad Title: The Short-and Long-Run Relationships Between the Exchange Rate of the Dollar and Producer Prices in the U.S. Abstract: This paper investigates empirically the relationship between exchange rates and producer prices in the U.S. using a multivariate dynamic framework. Cointegration tests reveal that is a stable long-run relationship between prices, exchange rates and other factors according to which depreciations lead to higher prices. However, the estimated effect is not consistent with the pure form of the purchasing power parity hypothesis. It is also found that in the short run, the rate of price inflation. Finally, there appears to be bi-directional causality between producer prices and exchange rates. [E31, F31, F41[ Journal: International Economic Journal Pages: 59-71 Issue: 2 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000011 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000011 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:2:p:59-71 Template-Type: ReDIF-Article 1.0 Author-Name: Thomas Chiang Author-X-Name-First: Thomas Author-X-Name-Last: Chiang Author-Name: Jose Trinidad Author-X-Name-First: Jose Author-X-Name-Last: Trinidad Title: Risk and International Parity Conditions: A Synthesis from Consumption Based Models Abstract: Built on a consumption-based capital asset pricing model, this paper presents a coherent theoretical framework from which the main international parity conditions are derived. These conditions represent market equilibria characterized by the equality of gross returns after adjustment for risk premia. The spectrum of assets treated is broadened to include equity markets. The parity conditions obtained from the model are then used to characterize the relationships for the pricing of risks encountered in international finance. Only two fundamental types of aggregate risk matter when pricing any asset: equity risk and foreign exchange rate risk. The relative riskiness of an asset can then be approximately measured by a linear combination of equity and foreign exchange risk premia. [F30, G12] Journal: International Economic Journal Pages: 73-101 Issue: 2 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000012 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000012 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:2:p:73-101 Template-Type: ReDIF-Article 1.0 Author-Name: Ky-Hyang Yuhn Author-X-Name-First: Ky-Hyang Author-X-Name-Last: Yuhn Title: Financial Integration and Market Efficiency: Some International Evidence from Cointegration Tests Abstract: This study investigates whether the globalization of financial markets enhances the efficiency of national stock markets. To this end, we have developed a dynamic representation of cointegration which is consistent with hypothesis that stock prices reflect the efficient discounting of new information on market fundamentals and testes for market efficiency in five industrialized markets (the United States, Canada, Japan, the United Kingdom, and Germany) over the last two decades. Our empirical analysis indicates that the U.S. and Canadian stock markets obey the long-run equilibrium path implied by our dynamic cointegration model, but the Japanese, British, and German markets do not exhibit such characteristics. Thus, it can be claimed that the stock markets of the United States and Canada are informationally efficient, whereas those of Japan, the United Kingdom, and Germany are not. [G15, G14] Journal: International Economic Journal Pages: 103-116 Issue: 2 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000013 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000013 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:2:p:103-116 Template-Type: ReDIF-Article 1.0 Author-Name: Y. Stephen Chiu Author-X-Name-First: Y. Stephen Author-X-Name-Last: Chiu Title: International Public Goods Coordination: Do Trade Barriers Matter? Abstract: This paper presents a model in which countries form economic unions which each determine common commercial policy and coordinate public good investment which generate cross-country externalities for its members. The scenario that all countries integrate into unions of the same size is studied. The focus is how the public good investment and national welfare vary with degrees of trade barriers and regionalism. Results are compared with those obtained in the public goods coordination literature that assumes free trade or homogeneous private goods. [F15, H40] Journal: International Economic Journal Pages: 117-135 Issue: 2 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000014 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000014 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:2:p:117-135 Template-Type: ReDIF-Article 1.0 Author-Name: Kenneth Hanson Author-X-Name-First: Kenneth Author-X-Name-Last: Hanson Author-Name: Kenneth Reinert Author-X-Name-First: Kenneth Author-X-Name-Last: Reinert Title: The Distributional Effects of U.S. Textile and Apparel Protection Abstract: A number of studies have estimated the effects of U.S. textile and apparel protection. Most of these studies have not addressed the impact of these protective measures on the distribution of household income. This paper addresses the income distribution issue using a computable general equilibrium model of the United States with a disaggregated household sector. We find that liberalization of textile and apparel import restraints improves the real income of all household categories, but does so more for higher income households. Therefore, liberalization of these protective measures will be slightly regressive. [F13, F14] Journal: International Economic Journal Pages: 1-12 Issue: 3 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000015 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000015 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:3:p:1-12 Template-Type: ReDIF-Article 1.0 Author-Name: Lawrence Kaufmann Author-X-Name-First: Lawrence Author-X-Name-Last: Kaufmann Title: A Model of Spillovers Through Labor Recruitment Abstract: This paper develops a model where spillovers can be generated through domestic firm recruitment of employees at a multinational corporation (MNC) where more advanced technologies are employed. It is shown that both spillover and no-spilover equilibria are possible in the model, depending on the marginal costs and benefits of recruitment. Spillover benefits depend on demand parameters and the technological capabilities of the domestic firm, and spillover costs are determined by the MNC's internal wage. Compared with the no-spillover equilibrium, spillovers lead to fewer technology transfers by the MNC and higher market prices. [031, F23] Journal: International Economic Journal Pages: 13-33 Issue: 3 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000016 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000016 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:3:p:13-33 Template-Type: ReDIF-Article 1.0 Author-Name: David Collie Author-X-Name-First: David Author-X-Name-Last: Collie Title: Delegation and Strategic Trade Policy Abstract: In a trade policy game where the domestic government uses a tariff and the foreign government uses an export subsidy, it is shown that the domestic government should delegate to a policy-maker who attaches less weight to the profits of the domestic firm than the welfare maximizing government. This makes domestic trade policy less aggressive and increases both domestic and foreign welfare. It is even possible that the optimal policy-maker attaches a negative weight to the profits of the domestic firm [F12, F13] Journal: International Economic Journal Pages: 35-46 Issue: 3 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000017 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000017 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:3:p:35-46 Template-Type: ReDIF-Article 1.0 Author-Name: Bruce Felmincham Author-X-Name-First: Bruce Author-X-Name-Last: Felmincham Author-Name: Peter Mansfield Author-X-Name-First: Peter Author-X-Name-Last: Mansfield Title: Rationality and the Risk Premium on the Australian dollar Abstract: A Model of the forward rate error of the USD/AUD spot exchange rate is fitted to daily data for the period 15th December 1983 to 31st December 1991. This provides a data set of 2034 daily trading observations. Explanations of the forecast error include a risk premium represented by a constant plus the conditional variance generated from a GARCH (1,1)-M analysis of the error process and information variables in the form of lagged forward rate errors. The following conclusions are drawn form estimates for the full sample: the USD/AUD spot rate is subject to a constant premium: there is little evidence to support a time varying component and the market is influenced by lagged forward errors. Sub period estimation confirms these results, although a time varying premium is evident prior to the February 1985 depreciation. The economic implications of these findings are discussed. [F31] Journal: International Economic Journal Pages: 47-59 Issue: 3 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000018 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000018 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:3:p:47-59 Template-Type: ReDIF-Article 1.0 Author-Name: Jon Ford Author-X-Name-First: Jon Author-X-Name-Last: Ford Author-Name: Henry Thompson Author-X-Name-First: Henry Author-X-Name-Last: Thompson Title: Global Sensitivity of Neoclassical and Factor Proportions Models to Production Technology. Abstract: This paper pictures the global influence of various patterns of returns to scale in the general equilibrium model of production with two factors and two goods. Constant, increasing, and decreasing returns to scale at the sectoral level are explicitly specified. The changing slope and curvature of contract curves, isoquants, production frontiers, and relative price lines are examined under various Cobb-Douglas and exponential production functions. Fundamental properties of neoclassical and factory proportions theory are thus illustrated. [D50, F11] Journal: International Economic Journal Pages: 61-74 Issue: 3 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000019 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000019 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:3:p:61-74 Template-Type: ReDIF-Article 1.0 Author-Name: Don Clark Author-X-Name-First: Don Author-X-Name-Last: Clark Author-Name: David Walker Author-X-Name-First: David Author-X-Name-Last: Walker Title: Do Outward-Oriented Developing Economies Industrialize Faster? Abstract: This paper investigates the relationship between trade policy orientation and industrialization. Rates of industrial diffusion, rather than per capita output growth rates, are related to Dollar's (1992) index of real exchange rate distortion to establish the superiority of outward-oriented strategies in fostering industrial development. Results suggest developing countries will have more success in their efforts ot industrialize if they adopt outward-oriented trade strategies. [F13, O4] Journal: International Economic Journal Pages: 75-83 Issue: 3 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000020 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000020 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:3:p:75-83 Template-Type: ReDIF-Article 1.0 Author-Name: James Kahn Author-X-Name-First: James Author-X-Name-Last: Kahn Author-Name: Jong-Soo Lim Author-X-Name-First: Jong-Soo Author-X-Name-Last: Lim Author-Name: Changyong Rhee Author-X-Name-First: Changyong Author-X-Name-Last: Rhee Title: Birth, Death, and Dynamic Inefficiency in an Endogenous Growth Model Abstract: This paper builds a finite horizon endogenous growth model by incorporating Lucas' (1988) human capital model into an uncertain lifetime framework a la Buiter (1988). Our finite horizon model has different policy implication from infinite horizon models. For example, a non-positive link between capital income taxation and economic growth in infinite horizon models does not hold in our finite horizon model. Also, our finite horizon model shows that the short-run macro management policy which has only the level effect in infinite horizon models can affect the long-run economic growth. [O4] Journal: International Economic Journal Pages: 85-102 Issue: 3 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000021 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000021 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:3:p:85-102 Template-Type: ReDIF-Article 1.0 Author-Name: Bartholomew Armah Author-X-Name-First: Bartholomew Author-X-Name-Last: Armah Author-Name: James Peoples Author-X-Name-First: James Author-X-Name-Last: Peoples Title: Foreign Corporate Acquisition Activity Domestic Union Status in the U.S. Abstract: The Influence of corporate acquisitions on union membership may differ when the acquiring firm if foreign instead of domestic. This study tests this hypothesis by estimating union status equation that includes measures of foreign and domestic acquisition activity. The findings suggest that the tendency of foreign owners to acquire firms in less capital intensive industries partly explain the higher probability of union membership in industries experiencing foreign acquisition activity. [J3] Journal: International Economic Journal Pages: 103-115 Issue: 3 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000022 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000022 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:3:p:103-115 Template-Type: ReDIF-Article 1.0 Author-Name: Suk-In Chang Author-X-Name-First: Suk-In Author-X-Name-Last: Chang Title: The Effects of Economic Integration Between North and South Korea: A Computable General Equilibrium Analysis Abstract: This paper investigates the potential impact of economic integration between North and South Korea on the economy of South Korea. A nine-sector, trade-focused, computable general equilibrium (CGE) model is constructed. The model is used to quantify the likely consequences of various forms of economic integration between the two Koreas. The simulation results indicate that unless factor movement (labor inflow from the North, and capital outflow to the same) are considered, any preferential trading system between the two Koreas has an inconsequential impact (positive or negative, aggregate or sectoral) from the viewpoint of the south. Much greater effects, however, follow from factor movements. [C68, D68, F13, F15] Journal: International Economic Journal Pages: 1-16 Issue: 4 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000023 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000023 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:4:p:1-16 Template-Type: ReDIF-Article 1.0 Author-Name: John Baffore-Bonnie Author-X-Name-First: John Author-X-Name-Last: Baffore-Bonnie Author-Name: Mohammed Khayum Author-X-Name-First: Mohammed Author-X-Name-Last: Khayum Title: Economic Development, Life-Cycle Consumption and Planning Hirizon Abstract: This article presents estimates of consumer planning horizons for countries at different levels of economic development. Within an intertemporal optimization framework a direct relationship is observed between the length of consumers' planning horizons and the level of economic development. In particular, consumption behavior in a sample of developed economies reflect longer planning horizons than in the sample of less developed economics. The average planning horizon for a group of less developed economies is about 7 months, while it is 1.6 and 3.8 years for middle and high income economies, respectively. [E21, O50] Journal: International Economic Journal Pages: 17-37 Issue: 4 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000024 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000024 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:4:p:17-37 Template-Type: ReDIF-Article 1.0 Author-Name: Roland Craigwell Author-X-Name-First: Roland Author-X-Name-Last: Craigwell Author-Name: Sudesh Samaroo Author-X-Name-First: Sudesh Author-X-Name-Last: Samaroo Title: Dynamic Modelling of the Current Accounts: Evidence from the Caribbean Abstract: This paper uses time series and pooled data to estimate the current account function of a non-oil developing country (Barbados) and an oil dependent economy (Trinidad and Tobago). The pooled data reveals that the terms of trade (TOT), the government variable (BSGDP), foreign incomes (FGDP), the prime rate and long term capital flows (LTKGDP) are significant variables. The cointegration-error correction model suggests that in Trinidad and Tobago, the exchange rate, BSGDP and FGDP are important explanatory variables; for Barbados, TOT and the BSGDP ratio are influential in the long-run while the latter ratio and LTKGDP are important short run regressors. [F10, F11] Journal: International Economic Journal Pages: 39-50 Issue: 4 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000025 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000025 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:4:p:39-50 Template-Type: ReDIF-Article 1.0 Author-Name: G. Chris Rodrigo Author-X-Name-First: G. Chris Author-X-Name-Last: Rodrigo Author-Name: Will Martin Author-X-Name-First: Will Author-X-Name-Last: Martin Title: Can The World Trading System Accommodate More East Asian Style Exporters? Abstract: A CGE model of world trade is used to examine whether many developing countries can simultaneously expand manufactures exports along East Asian lines without suffering serious terms of trade decline and consequent welfare loss. Experiments are performed in which manufactures exports are expanded for each developing region in turn and for all regions simultaneously. When driven by productivity gains in manufactures exports production, welfare gains are found to be significant and stable, even enhanced by parallel advances in other developing regions: i.e. export growth is mutually reinforcing as a result of extensive South-South manufactures flow, a pattern that is intensifying. [F 17] Journal: International Economic Journal Pages: 51-72 Issue: 4 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000026 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000026 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:4:p:51-72 Template-Type: ReDIF-Article 1.0 Author-Name: Dipendra Sinha Author-X-Name-First: Dipendra Author-X-Name-Last: Sinha Title: Determinants of Import Demand in Thailand Abstract: This study estimates an aggregate import demand function for Thailand. The earlier studies on import demand based on time series date did not deal with the issue of stationarity of the time series before estimation. Using the cointegration approach, we find aggregate import demand for Thailand to be price inelastic, cross price inelastic (with respect to domestic price) and income inelastic in the short run. In the long run, aggregate import demand is still price inelastic and cross price inelastic. However, aggregate import demand is highly income elastic in the long run. [C22, F14] Journal: International Economic Journal Pages: 73-873 Issue: 4 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000027 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000027 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:4:p:73-873 Template-Type: ReDIF-Article 1.0 Author-Name: Bun Song Lee Author-X-Name-First: Bun Song Author-X-Name-Last: Lee Author-Name: Joseph Phillips Author-X-Name-First: Joseph Author-X-Name-Last: Phillips Title: The Earnings Experience of Rural-Urban Migrants in Korea Abstract: Migration models in the Harris-Todaro tradition imply that urban informal sector earnings are less than rural sector earnings. Examining the situation for Korea, we find that both urban formal and informal sector earnings exceed earnings opportunities in rural areas, making rural-urban migration the best decision for the individual and for the Korean economy in terms of maximizing output. A Dutch Disease model is offered as an explanation for the unexpected strength of urban informal sector earnings. The implication for policy makers is that government efforts may be better directed toward mitigating the externalities caused by over-crowding, rather than attempting to influence population movements. [J31] Journal: International Economic Journal Pages: 85-101 Issue: 4 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000028 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000028 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:4:p:85-101 Template-Type: ReDIF-Article 1.0 Author-Name: Mohsen Bahmani-Oskooee Author-X-Name-First: Mohsen Author-X-Name-Last: Bahmani-Oskooee Author-Name: Hyun-Jae Rhee Author-X-Name-First: Hyun-Jae Author-X-Name-Last: Rhee Title: Response of Domestic Production to Depreciation in Korea: an Application of Johansen's Conintegration Methodology Abstract: Theoretical and empirical studies concerned with the effects of devaluation on domestic production have generally concluded that while in industrial countries devaluation is expansionary, in developing nations it is contractionary. In this paper we consider the experience of Korea alone. After adopting a reduced form model from the literature, we employed Johansen's cointegration and error-correction technique and used quarterly data over 1971-94 to show that in Korea real depreciation of the Korean won is indeed expansionary. [F31, F41] Journal: International Economic Journal Pages: 103-112 Issue: 4 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000029 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000029 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:4:p:103-112 Template-Type: ReDIF-Article 1.0 Author-Name: Sajid Anwar Author-X-Name-First: Sajid Author-X-Name-Last: Anwar Title: International Transmission of Government Spending, Monopolistic Competition and North-South Trade Abstract: This paper utilises a North-South general equilibrium model where South exports an intermediate good to North in exchange for differentiated goods. The model is used to examine international transmission of government spending and its welfare implications. It is shown that an increase in government spending in North (South) can increase (decrease) the number of differentiated goods produced, thereby decreasing (increasing) the degree of monopoly power in North. Furthermore an increase in government spending in South can decrease the welfare North, but the impact of an increase in government spending in North the welfare of South cannot be unambiguously determined. [F11, H41] Journal: International Economic Journal Pages: 113-126 Issue: 4 Volume: 11 Year: 1997 X-DOI: 10.1080/10168739700000030 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739700000030 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:11:y:1997:i:4:p:113-126 Template-Type: ReDIF-Article 1.0 Author-Name: Maxwell Fry Author-X-Name-First: Maxwell Author-X-Name-Last: Fry Title: Savings, Investment, Growth and Financial Distortions in Pacific Asia and Other Developing Areas Abstract: I estimate a simultaneous-equation model in which the real deposit rate of interest and the black market exchange rate premium affect saving, investment, export growth and output growth. The estimates corroborate earlier findings that directeffects of financial distortions on savings are minuscule. Because a major determinant of savings is the output growth rate, however, I find that saving is influenced substantially, albeit indirectly, by financial distortions through their effect on investment, export growth, and output growth. Simulations indicate that difference in the average values of the financial distortion variables explain approximately 50 percent of the difference in saving ratios and 75 percent of the difference in out put growth rate between five Pacific Asian countries and 11 countries in other developing areas. [E20, E44, F41, O11, O16] Journal: International Economic Journal Pages: 1-24 Issue: 1 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000001 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000001 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:1:p:1-24 Template-Type: ReDIF-Article 1.0 Author-Name: Chulho Jung Author-X-Name-First: Chulho Author-X-Name-Last: Jung Author-Name: Khosrow Doroodian Author-X-Name-First: Khosrow Author-X-Name-Last: Doroodian Title: The Persistence And Japan's Trade Surplus Abstract: In this study we use tiem-series data to examine the persistence of Japanese trade balance surplus and the existence of a J-curve effect for the period 1975 (I)-1990(I). We extend the earlier studies by applying the Shiller lag model to the first differences of the variables that are subject to a unite root process. The empirical findings support the J-curve effect for Japan and also illustrate that it take 13 quarters before the full effect of an exchange rate change on the trade balance is realized. The results also suggest that in 1985(I), for example, a once-and for -all real currency appreciation of 36.2 percent would remove the average quarterly real trade balance surplus of 2.5 trillion yen in 13 quartets, ceteris paribys.[F30] Journal: International Economic Journal Pages: 25-37 Issue: 1 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000002 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000002 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:1:p:25-37 Template-Type: ReDIF-Article 1.0 Author-Name: Chan Il Park Author-X-Name-First: Chan Il Author-X-Name-Last: Park Title: Transactions Demand for Money and the Inverse Relation Between Inflation and Output: the Case of Korean Economy Abstract: This study develops a model of inflation which combines the simple quantity theory with the cash-in-advance model. The econometric results show that (a) the transactions demand for money can explain, contrary to the Phillips curve proposition, the negative relation between inflation and real output growth; (b) the proposition that asset transactions may influence the transactions demand for money independently of fluctuations in real output and interest rate does not stand up even given an extremely active stock market; and (c) the implication of Tsiang's cash-in-advance model that international trade can be a separate source of the transactions demand is not supported. Policy markers should take into account the aggregate demand pressure in the form of nominal money supply growth in excess of growth in money demand, rather than the nominal money supply growth along. [E41] Journal: International Economic Journal Pages: 39-51 Issue: 1 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000003 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000003 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:1:p:39-51 Template-Type: ReDIF-Article 1.0 Author-Name: Menzie Chinn Author-X-Name-First: Menzie Author-X-Name-Last: Chinn Author-Name: William Maloney Author-X-Name-First: William Author-X-Name-Last: Maloney Title: Financial and Capital Account Liberalization in the Pacific Basin: Korea and Taiwan During the 1980's Abstract: This paper presents an alternative method of testing for financial capital mobility in the absence of forward exchange markets. A model of domestic interest rate determination during liberalization is applied to Korean and Taiwanese data. A variety fo diagnostic and recursive tests are used to isolate structural breaks in the data. It is shown that Korean interest rates behave as if determined domestically until late 1988 or early 1989, while Taiwanese rates exhibit this behavior until early 1989. Thereafter, these economies' interest rates appear tightly linked to the Euro Yen rate. These results contrast with those obtained by Reisen and Yeches (1993) which indicated a single opening and closing for Korea, and no structural break for Taiwan. They also differ from those results of Jwa (1994) indicating two temporary openings for Korea. Greater integraton of these domestic markets with world financial markets suggests that it will be more difficult for these countries to stabilize their economies in the face of capital inflows and outflows. [F32,F34] Journal: International Economic Journal Pages: 53-74 Issue: 1 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000004 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000004 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:1:p:53-74 Template-Type: ReDIF-Article 1.0 Author-Name: Yong Yang Author-X-Name-First: Yong Author-X-Name-Last: Yang Title: International Taxation When Domestic Distributional Policy is Constrained Abstract: International capital trade benefits a nation as a whole but the gains from trade are unevenly distributed among owners of various factors. The traditional view in international taxation is that a small economy should not tax capital trade. However, this view is valid only if the government is free to choose domestic distributional policy. This paper investigates what constitutes optimal international tax policy when domestic distributional policy is constrained at a minimum rate. The finding is that taxing capital trade could be welfare-improving. [F21, H21, H24] Journal: International Economic Journal Pages: 75-93 Issue: 1 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000005 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000005 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:1:p:75-93 Template-Type: ReDIF-Article 1.0 Author-Name: Young Seok Ahn Author-X-Name-First: Young Seok Author-X-Name-Last: Ahn Author-Name: Slamet Seno Adji Author-X-Name-First: Slamet Seno Author-X-Name-Last: Adji Author-Name: Thomas Willett Author-X-Name-First: Thomas Author-X-Name-Last: Willett Title: The Effects of Inflation and Exchange Rate Policies on Direct Investment to Developing Countries Abstract: This study focuses on the effects of inflation and exchange rate policy on direct investment flows to developing countries. We find that inflation does have a substantial negative effect on capital inflows. Our estimates indicate that this effect can be significantly reduced, but not eliminated, by following exchange rate policies which avoid substantial overvaluation of the currency. [F 30] Journal: International Economic Journal Pages: 95-104 Issue: 1 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000006 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000006 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:1:p:95-104 Template-Type: ReDIF-Article 1.0 Author-Name: Shen Chung-Hua Author-X-Name-First: Shen Author-X-Name-Last: Chung-Hua Title: The Term Structure of Taiwan Money Market Rates And Rational Expectation Abstract: The expectation theory of the term structure was investigated in this study by employing the 10 day short and 30, 90 and 180 day long commercial paper rates in Taiwan. The results indicate that the theory is rejected for the shorter maturity, such as (10,30) days rates, but cannot be rejected for the longer maturities, such as (10, 90) and (10,180) day rates. The reason that the short maturity does not work out well for the expectation theory is probably due to noise, e.g. monthly factor, contaminated in the high frequency date, but not in the low frequency data. Since all rates are cointegrated, the policy “Operation Twist” is not suggested. [C30,E43] Journal: International Economic Journal Pages: 105-119 Issue: 1 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000007 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000007 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:1:p:105-119 Template-Type: ReDIF-Article 1.0 Author-Name: Eric Wang Author-X-Name-First: Eric Author-X-Name-Last: Wang Title: Sensitivities of Import Demand and Export Supply in an Open Developing Economy: the Evidence from Taiwan, 1961-1994 Abstract: This study examines the time variations in the elasticities of derived demand for imports and supply of exports regarding Taiwan's aggregate production. It is to identify the long run relationship between production behavior and development process. A translog cost function model is set up to estimate the elasticity series in 1961-94. A regression model incorporating spline time setting with economic variables is built for testing the variations. Empirical results indicate that the elasticity of import demand varies with foreign income and the elasticity of export supply varies with domestic production capacity. Major exogenous events are shown to have significant impacts on production decision. [F14] Journal: International Economic Journal Pages: 121-139 Issue: 1 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000008 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000008 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:1:p:121-139 Template-Type: ReDIF-Article 1.0 Author-Name: Wontack Hong Author-X-Name-First: Wontack Author-X-Name-Last: Hong Title: Financing Export-Oriented Catching-Up in Korea: Credit-Rationing, Sustained High Growth and Financial Chaos Abstract: In the 1960s and 1970s, bank credits were rationed essentially on the basis of firm's export-performance in Korea. Financial institutions did not have the ability to properly evaluate prospective entrepreneurs and potentially high return projects. It was cost-quality competition at the international export market that screened firms for efficiency, and this natural selection process of the fiercely competitive international market compensated for the backwardness of the Korean financial sector, thereby enabling Korea's sustained high growth. Credit-rationing on the basis of firm's export performance very much overcame the adverse selection problems in credit markets. Since the early 1980s, however, bank credit has been rationed less and less in proportion to export performance, while the nominal financial liberalization has failed to develop the Korean financial sector. This may explain the financial chaos in the 1990s. Journal: International Economic Journal Pages: 141-153 Issue: 1 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000009 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000009 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:1:p:141-153 Template-Type: ReDIF-Article 1.0 Author-Name: Hui-Kuan Tseng Author-X-Name-First: Hui-Kuan Author-X-Name-Last: Tseng Title: Exchange Rate Variability and Exchange Market Intervention: Spot vs. Forward Abstract: The paper compares forward and spot market interventions by examining their effects on exchange rate fluctuations. Using a stochastic partial equilibrium model, it is shown that the two interventions fail to limit spot rate fluctuations caused by shocks that do not perturb traders' hedging activity directly. When shocks perturb this hedging activity in the first place, however, it is shown that intervention via spot exchange may trigger very large fluctuations once it cannot sufficiently counteract hedgers' and speculators' combined response to risk premia. In this case, by contrast, the forward intervention can dampen exchange rate variability. [F31] Journal: International Economic Journal Pages: 1-16 Issue: 2 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000010 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000010 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:2:p:1-16 Template-Type: ReDIF-Article 1.0 Author-Name: Pekka Ahtiala Author-X-Name-First: Pekka Author-X-Name-Last: Ahtiala Title: Fiscal Policy under Flexible Exchange Rates: When is Expansion Contractionary? Abstract: In this paper the behaviour functions are specified to correspond to their foundations in closed-economy macrotheory . The demand for real money balances, in terms of the expenditure basket of goods, is specified as a function of income in terms of the same basket. Imports are specified as a function of expenditures, being functionally part of expenditures. The supply of labor is specified as a function of the expenditure price. Fiscal expansion, while expansionary in the real wage model, turns out to be expansionary, neutral, or contractionary in the money wage model depending on whether the income elasticity of the demand for money is smaller than, equal to, or greater than one, also in the long run. However, if interest payments on foreign securities are not smaller relative to the trade balance, many of the effects are reversed. Output and the exchange rate overshoot their steady-state levels in both cases. [E1, F41] Journal: International Economic Journal Pages: 17-34 Issue: 2 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000011 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000011 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:2:p:17-34 Template-Type: ReDIF-Article 1.0 Author-Name: Chang-Kon Choi Author-X-Name-First: Chang-Kon Author-X-Name-Last: Choi Title: Asymmetric Fluctuations and the Third Moments in the Real Business Cycle Theory Abstract: This paper examines the third moments in actual and simulated business cycles. The main goal is to answer the question whether a business cycle model can generate the asymmetry observed in the quarterly post war data. The results indicate that for third moments, the RBC model does not fit the data as well as it does for second moments. It is also shown that transitory shock can be better than persistent shock in matching the third moment, which implies an implication for modeling strategy of real business cycles theory. [E32] Journal: International Economic Journal Pages: 35-53 Issue: 2 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000012 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000012 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:2:p:35-53 Template-Type: ReDIF-Article 1.0 Author-Name: Hwan Lin Author-X-Name-First: Hwan Author-X-Name-Last: Lin Title: Import-Subsidy Coordination and the Gains from International Diffusion Of Differentiated Middle Products Abstract: This paper shows that under reasonable parameter values it is independently rational for an importing country to impose a tariff on differentiated middle products, which are invented by monopolists worldwide in the high-technology sector. But to realize mutual gains, countries must use import subsidies in a cooperative manner. To dictate policy coordination, the paper computes the bilaterally coordinated subsidy bands under different sets of parameter values, reflecting monopoly power, spending share, and supply elasticities. [F12, F13] Journal: International Economic Journal Pages: 55-76 Issue: 2 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000013 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000013 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:2:p:55-76 Template-Type: ReDIF-Article 1.0 Author-Name: Laura Lu Author-X-Name-First: Laura Author-X-Name-Last: Lu Author-Name: Panos Mourdoukoutas Author-X-Name-First: Panos Author-X-Name-Last: Mourdoukoutas Title: Trade Efficiency and Trade Points: Small Versus Large Players Abstract: The impact of Trade Points on corporate performance depends on assumptions about returns to scale, types of games played, and size of gains in demand and revenues vis-$aacute;-viscosts. Specifically: (i) in a world of profit- maximizing firms, when the contribution of Trade Points to total revenues exceeds the additional costs, Trade Points help both small firms and Large ones with the size of gains depending on the types of returns to scale and the size of demand change: and (ii) whether to connect to Trade Points depends on the type of games assumed and the size of demand gains vis-$aacute;-viscosts. [F12, D00, L13, L86] Journal: International Economic Journal Pages: 77-91 Issue: 2 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000014 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000014 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:2:p:77-91 Template-Type: ReDIF-Article 1.0 Author-Name: Mehdi Monadjemi Author-X-Name-First: Mehdi Author-X-Name-Last: Monadjemi Author-Name: Hyeonseung Huh Author-X-Name-First: Hyeonseung Author-X-Name-Last: Huh Title: Private and Givernment Investment: A Study of Three OECD Countries Abstract: This paper examines the relationship between private investment and government spending in Australia, Britain and the United States. Since all time series data are stationary in first difference and cointegrated, these series are represented by an error correction model. Variance decomposition and impulse response functions are employed to investigate the effects of government spending on private investment. Generally the empirical results provide limited support for "crowding out" effects of government investment on private investment. The rate of interest and the corporate profit ability showed significant effects on private investment in two out of three cases. [E62, E63] Journal: International Economic Journal Pages: 93-104 Issue: 2 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000015 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000015 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:2:p:93-104 Template-Type: ReDIF-Article 1.0 Author-Name: Henry Thompson Author-X-Name-First: Henry Author-X-Name-Last: Thompson Title: Production with Two Factors and Many Goods Large Firms in a Small Open Economy Abstract: A tractable general equilibrium model of a small open economy producing many goods with two primary inputs is developed. Firms are large in that their output decisions affect their costs. One sector produces many different goods under variable costs, which arise through a link between output and the cost of the firm. Comparative static results depend on factor intensity and the degree of increasing costs. Some ambiguities arise in the comparative static adjustments associated with the sector producing the constant cost homogeneous good. [F1] Journal: International Economic Journal Pages: 107-116 Issue: 2 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000016 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000016 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:2:p:107-116 Template-Type: ReDIF-Article 1.0 Author-Name: Xu Bin Author-X-Name-First: Xu Author-X-Name-Last: Bin Title: Costly Monitoring in Financial Markets and Capital Outflow Restrictions Abstract: This paper examines welfare implications of removing capital outflow restrictions in a country whose financial markets are relatively inefficient in monitoring borrowers. A simple general equilibrium model is developed in which credit is rationed in one of the two production sectors due to costly information in financial markets. Opening to international capital markets is shown to cause an outflow of domestic wealth but no inflow of foreign credit, leading to more severe credit rationing. If the domestic investment opportunities that are unexploited due to credit rationing are sufficiently profitable, welfare of the country declines after it removes capital outflow restrictions. [O16] Journal: International Economic Journal Pages: 117-136 Issue: 2 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000017 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000017 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:2:p:117-136 Template-Type: ReDIF-Article 1.0 Author-Name: Mark Holmes Author-X-Name-First: Mark Author-X-Name-Last: Holmes Title: Inflation Convergence in the ERM: Evidence for Manufacturing and Services Abstract: Recent studies have concluded that the ERM has facilitated some degree of inflation convergence among its members with limited evidence of German leadership. These conclusions are based on national inflation measures which reflect aggregated output thereby masking different experiences at the sectoral level. This study examines inflation convergence in the ERM for manufacturing and service sector output using time-varying parameter analysis, common trends analysis and tests for weak exogeneity. For both sectors, there is no evidence of German leadership. Inflation convergence in manufacturing inflation, though limited, is more advanced than in services. [E3, F0, F4] Journal: International Economic Journal Pages: 1-16 Issue: 3 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000025 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000025 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:3:p:1-16 Template-Type: ReDIF-Article 1.0 Author-Name: Yoopi Abimanyu Author-X-Name-First: Yoopi Author-X-Name-Last: Abimanyu Title: Using Indonesia's Real Exchange Rate to Test Ricardian Equivalence Abstract: Using Indonesia as a study case, this paper analyzes the relationship between the actual real exchange rate, the equilibrium real exchange rate, and other macroeconomic variables. The estimate shows that, out of nine explanatory independent variables, only government consumption and the fiscal deficit have significant effects on the real exchange rate variable. Increases in both government consumption and the fiscal deficit appreciate the real exchange rate. This finding rejects Ricardian equivalence. [E62, F41, O53]. Journal: International Economic Journal Pages: 17-29 Issue: 3 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000026 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000026 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:3:p:17-29 Template-Type: ReDIF-Article 1.0 Author-Name: A. C. Arize Author-X-Name-First: A. C. Author-X-Name-Last: Arize Title: The Effects of Exchange Rate Volatility on U.S. Imports: An Empirical Investigation Abstract: In this paper we obtain and interpret new estimates of the short- and long-run influence of exchange-rate volatility (or risk) on the import flows of the United States, in the generalized floating exchange-rate period. The major finding is that there is a significant long-run negative effect of exchange-rate volatility on the volume of imports, as well as, a significant short-run negative effect. Therefore, it can be argued that exchange-rate volatility will have significant effects on the allocation of resources by market participants and that policy-makers can no longer rely on an import demand with only conventional variables for long-term international trade planning, forecasting and policy formulation. [F14, F31] Journal: International Economic Journal Pages: 31-40 Issue: 3 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000027 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000027 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:3:p:31-40 Template-Type: ReDIF-Article 1.0 Author-Name: Philip Bodman Author-X-Name-First: Philip Author-X-Name-Last: Bodman Title: A Contribution on the Empirics of Trade, Migration and Economic Growth for Australia and Canada Abstract: This paper examines the long-run dynamic relationship between openness, migration and economic growth for Australia and Canada through the estimation of a long-run aggregate production function for each economy using the Johansen (1988) procedure. Through the disaggregation of the capital input vector entering into each cointegrating relationship, the paper also provides new evidence concerning the importance of human capital, dwelling capital, government infrastructure capital and research and development capital for long-run economic growth. The estimates from the empirical analysis suggest that net migration, openness and integration favours the productivity and growth performance of both Australia and Canada, although the magnitude of these relationships is not large. [E23, F15] Journal: International Economic Journal Pages: 41-62 Issue: 3 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000028 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000028 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:3:p:41-62 Template-Type: ReDIF-Article 1.0 Author-Name: Cristina Echevarria Author-X-Name-First: Cristina Author-X-Name-Last: Echevarria Title: A Three-Factor Agricultural Production Function: The Case of Canada Abstract: This paper estimate a constant returns to scale agricultural production function of the three basic factors of production. Such a function is a useful tool for macroeconomic, Growth, and development studies. It uses the shares approach that Solow used in 1957 and very disaggregated Canadian data. The main results of this paper are that, first, in Canada agriculture is less labor intensive than both services and industry, but capital intensity is similar in the three sectors. Second, the share of land in value added is estimated to be 16%. Third, total factor productivity growth in Canada has been roughly the same—0.3%—in agriculture and manufactures over the period 1971-91. [D24, O13, O41, O47] Journal: International Economic Journal Pages: 63-75 Issue: 3 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000029 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000029 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:3:p:63-75 Template-Type: ReDIF-Article 1.0 Author-Name: Sang-Ho Lee Author-X-Name-First: Sang-Ho Author-X-Name-Last: Lee Title: R&D Spillovers, Technology Cartel, and Monopoly Regulation Abstract: In the presence of R&D spillovers, this paper analyzes the regulated firms' R&D performances according to their noncooperative or cooperative R&D activities. First, it analyzes the R&D equilibrium in local (natural) monopolies, examines its welfare effects, and finds some relationship between output regulation and R&D performance. Next, it proposes an optimal R&D subsidy mechanism that induces regulated firms to implement the social optimum, and discusses about the regulatory R&D subsidies policy. [L5, H21] Journal: International Economic Journal Pages: 77-88 Issue: 3 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000030 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000030 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:3:p:77-88 Template-Type: ReDIF-Article 1.0 Author-Name: Mohsen Bahmani-Oskooee Author-X-Name-First: Mohsen Author-X-Name-Last: Bahmani-Oskooee Title: Cointegration Approach to Estimate the Long-Run Trade Elasticities in LDCs Abstract: The Marshall-Lerner condition postulates that if the sum of import and export demand elasticities add up to more than one, devaluation should improve the trade balance in the long-run. This paper is the first to employ a long-run method, i.e., cointegration technique to estimate trade elasticities in less develop countries. In most cases the results reveal that indeed trade elasticities are large enough to support devaluation as a successful policy to improve the trade balance. [F10, F31] Journal: International Economic Journal Pages: 89-96 Issue: 3 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000031 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000031 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:3:p:89-96 Template-Type: ReDIF-Article 1.0 Author-Name: Udayan Roy Author-X-Name-First: Udayan Author-X-Name-Last: Roy Title: Vertical Product Differentiation and the Value of Time Abstract: This paper presents a model of international trade in goods that are ranked by quality. The model differs from existing theories of trade under vertical product differentiation in several ways. The main difference is in the way quality is modeled. But this paper also has different positive implications for the pattern of trade and it provides a theoretical explanation for Leontief Paradox-type empirical findings. The model indicates that several of the most important empirical challenges faced by the Heckscher-Ohlin-Vanek model can be dealt with by taking into account the quality aspect of traded goods.[F1] Journal: International Economic Journal Pages: 97-111 Issue: 3 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000032 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000032 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:3:p:97-111 Template-Type: ReDIF-Article 1.0 Author-Name: S. Bandyopadhyay Author-X-Name-First: S. Author-X-Name-Last: Bandyopadhyay Author-Name: S. C. Bandyopadhyay Author-X-Name-First: S. C. Author-X-Name-Last: Bandyopadhyay Title: Monopoly Unions and Corporatism: Implications for Strategic Trade Policy Abstract: This paper analyzes the effects of corporatism on wage, employment, and optimal trade policy in the context of international market share rivalry. A Striking result of the paper is that when an optimal (Nash)subsidy is in place, wages, employment and the level of the optimal export subsidy itself become independent of the degree of corporatism. This result breaks down under free trade or when domestic policy makers endogenize the foreign wage, yielding in the familiar negative relationship between the degree of corporatism and wages. [F13, J51] Journal: International Economic Journal Pages: 1-22 Issue: 4 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000018 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000018 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:4:p:1-22 Template-Type: ReDIF-Article 1.0 Author-Name: Nicolaas Groenewold Author-X-Name-First: Nicolaas Author-X-Name-Last: Groenewold Author-Name: Mohamed Ariff Author-X-Name-First: Mohamed Author-X-Name-Last: Ariff Title: The Effects of De-Regulation on Share-Market Efficiency in the Asia-Pacific Abstract: Emerging markets have been the fastest growing share markets in the past decade. There are 58 emerging markets. Yet, little is know about their efficiency compared to the vast body of results on efficiency of the developed markets. Little is also known of the way in de-regulation of emerging financial market affects efficiency. This Paper use daily closing values for share-price indexes for ten countries in the Asia-Pacific to assess the effect on market-efficiency of liberalisation of both the domestic capital-market regulation and the in the openness to international financial flows. We find that several measures of market-efficiency are unaffected by de-regulation while measure based on regression and autocorrelation point to greater predictability (both domestically and internationally) after de-regulation. This counter-integration of international capital markets. The domestic phenomenon remains a puzzle, however. Journal: International Economic Journal Pages: 23-47 Issue: 4 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000019 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000019 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:4:p:23-47 Template-Type: ReDIF-Article 1.0 Author-Name: Benjamin Kim Author-X-Name-First: Benjamin Author-X-Name-Last: Kim Author-Name: Noor Ghazali Author-X-Name-First: Noor Author-X-Name-Last: Ghazali Title: The Liquidity Effect of Money Shocks on Short-Term Interest Rates: Some International Evidence Abstract: There has recently been resurgence of interest in the liquidity effect of money shocks on short-term interest rates. This paper empirically investigates the liquidity effect for some of the G-7 countries, using single equation and vector autoregressive systems estimation methods. Generalized autoregressive conditional heteroskedasticity (GARCH) is employed to better capture the behaviour of interest rates and money. Our results strongly indicate presence of the liquidity effect in most of the countries. [E40, E52] Journal: International Economic Journal Pages: 49-63 Issue: 4 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000020 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000020 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:4:p:49-63 Template-Type: ReDIF-Article 1.0 Author-Name: Francois Doamekpor Author-X-Name-First: Francois Author-X-Name-Last: Doamekpor Title: Contributions of State-Owned Enterprises to the Growth of Total Output Abstract: This paper explores the effects of public enterprises on the growth of total output in thirty-seven countries. It uses a variant of the Cobb-Douglas production function to estimate contributions to total output. The object of this approach is to examine an alternative methodology for evaluating issues surrounding the existence of public enterprises. Within the constrains imposed by data availability on public enterprises, I find that evidence of contribution to total output, using the residual analysis method, is not as weak of fragile as previously found. This weakness is found only when the ordinary least squares regression method is used. [L32, O57] Journal: International Economic Journal Pages: 65-77 Issue: 4 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000021 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000021 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:4:p:65-77 Template-Type: ReDIF-Article 1.0 Author-Name: Jordan Shan Author-X-Name-First: Jordan Author-X-Name-Last: Shan Author-Name: Fiona Sun Author-X-Name-First: Fiona Author-X-Name-Last: Sun Title: Domestic Saving and Foreign Investment in Australia: A Granger Causality Test Abstract: This paper investigates the nature of the causal relationship between domestic saving and foreign investment in Australia using the Granger no-causality test procedure developed by Toda and Yamamoto (1995). The findings in the paper suggest that foreign investment has Granger-caused domestic saving in Australia but that no causality was found from saving to foreign investment. Therefore, the results reported in the paper reject the arguments by FitzGerald (1993) and support, indirectly, the Pitchford (1990) hypothesis in relation to the foreign debt debate in Australia and are consistent with the results of Layton and Makin (1993). [F21, F30] Journal: International Economic Journal Pages: 79-87 Issue: 4 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000022 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000022 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:4:p:79-87 Template-Type: ReDIF-Article 1.0 Author-Name: Dewan Abdullah Author-X-Name-First: Dewan Author-X-Name-Last: Abdullah Title: Money Growth Variability and Stock Returns: An Innovations Accounting Analysis Abstract: This paper employs a seven variable vector autoregression system to analyze the effects of money growth variability on British stock returns using the London share price index. Other variables included in the model are M1 money, budget deficits and surpluses, industrial production, consumer price index, and a long term interest error variance decompositions following Sims (1980). The results of the analysis suggest that money growth variability accounts for 22.82% and 19.53% of the variance of interests rates and stock returns respectively, and hence is considered to be an important influence concerning the and uncertainty associated with returns on investment in stocks and other financial assets.[E44] Journal: International Economic Journal Pages: 89-104 Issue: 4 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000023 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000023 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:4:p:89-104 Template-Type: ReDIF-Article 1.0 Author-Name: William Smith Author-X-Name-First: William Author-X-Name-Last: Smith Title: Birth, Death, and Consumption: Overlapping Generations and the Random Walk Hypothesis Abstract: This paper studies the time-series behavior of consumption in a model that incorporates birth, death, and a precautionary motive for saving. Consumption of an individual agent is a random walk. However, aggregate consumption is a random walk if and only if the sum of the death rate and population growth rate is zero. Failure of the random walk hypothesis should not be attributed to finite horizons perse, but rather to inter-generational transfers caused by birth and death. Unlike certainty-equivalent models, the expected growth of consumption depends on financial wealth, rather than wage income or human capital. [D91, E21] Journal: International Economic Journal Pages: 105-116 Issue: 4 Volume: 12 Year: 1998 X-DOI: 10.1080/10168739800000024 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739800000024 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:12:y:1998:i:4:p:105-116 Template-Type: ReDIF-Article 1.0 Author-Name: Tsai Pan-Long Author-X-Name-First: Tsai Author-X-Name-Last: Pan-Long Title: Regional Intergration, Foreign Investment, And Optimal Trade And Investment Policies Abstract: Using an international duopoly model, this paper first investigates the impacts of the formation of a North-South regional intergration (RI) on both the developed member country and the developing nonmember country. The RI is shown indeed to have trade diversion effect and to depress the welfare of the nonmember country. It then derives explicitly the conditions under which the nonmember exporting firm will make FDI into the economic region after its formation. The optimal trade and investment policies of the nonmember country after the RI are shown to be export subsidies no matter there is FDI or not. Moreover, in the case with FDI, the nonmember country should subsidize the export and the FDI of its firms equally. [F21] Journal: International Economic Journal Pages: 1-18 Issue: 1 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000025 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000025 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:1:p:1-18 Template-Type: ReDIF-Article 1.0 Author-Name: Broll Udo Author-X-Name-First: Broll Author-X-Name-Last: Udo Title: Export as an Option Abstract: This note studies the implications of a firm's advantage to allocate production to different markets under exchange rate risk. As exchange rate volatility increases, so does the value of the option to export. The firm's flexibility can be seen as a real hedging instrument. This kind of risk management policy has the advantage that the hedge instrument is sensitive to the realization of foreign spot exchange rates. Multinational firms, especially, can be regarded as flexible firms because of their use of worldwide distribution facilities. [F31, J20] Journal: International Economic Journal Pages: 19-26 Issue: 1 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000026 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000026 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:1:p:19-26 Template-Type: ReDIF-Article 1.0 Author-Name: Diao Xinshen Author-X-Name-First: Diao Author-X-Name-Last: Xinshen Author-Name: Somwaru Agapi Author-X-Name-First: Somwaru Author-X-Name-Last: Agapi Title: Mercosur and the U.S.: an International General Equilibrium Evaluation of the Regional Integration Abstract: A dynamic general equilibrium model is constructed to analyze the effects of the Southern Common Market (MERCOSUR) on the member countries as well as on the U.S. economy. By taking into account dynamic adjustments, we find that while the effects of MERCOSUR on its member countries' investment, consumer welfare and national product are positive, the respective effects on the U.S. economy are negative. Such negative effects are small, as U.S.-MERCOSUR trade shares with respect to U.S. total trade are quite small. When MERCOSUR additionally adopts its common external tariff policy, growth in MERCOSUR's total trade implied an increase in trade between MERCOSUR and other countries. In this case, both MERCOSUR member countries and the U.S. are better off. [C68, F11, O41] Journal: International Economic Journal Pages: 27-93 Issue: 1 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000027 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000027 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:1:p:27-93 Template-Type: ReDIF-Article 1.0 Author-Name: D. Giannaros Author-X-Name-First: D. Author-X-Name-Last: Giannaros Author-Name: B. Kolluri Author-X-Name-First: B. Author-X-Name-Last: Kolluri Author-Name: M. Panik Author-X-Name-First: M. Author-X-Name-Last: Panik Title: An Empirical Analysis of The Effects of Government Spending on Capital Investment: Evidence from O.E.C.D. Countries. Abstract: This paper focuses on the possible “direct” effect in increased government size on fixed capital formation. That is, we hypothesize that as government increases its consumption as percentage of GDP, investors modify their investment plans accordingly. It is our contention that the direct effect of government size on fixed capital investment manifest themselves through a downward shift in the investment schedule. To test this hypothesis, we estimate an aggregate investment function for eighteen O.E.C.D. countries for the period 1960-1994. Our findings suggest a negative relationship between government size and fixed capital investment. [ E22, E62] Journal: International Economic Journal Pages: 45-55 Issue: 1 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000028 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000028 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:1:p:45-55 Template-Type: ReDIF-Article 1.0 Author-Name: Kim Myeong-Soo Author-X-Name-First: Kim Author-X-Name-Last: Myeong-Soo Author-Name: N. Edward Coulson Author-X-Name-First: N. Edward Author-X-Name-Last: Coulson Title: Sources of Fluctuations in the Housing Market Abstract: In this study, sources of economic fluctuations in the housing market are investigated using U.S. data. A structural VAR (vector autoregressive) model is set up with a new method of ordering the residuals introduced by swanson and granger (1997) that is based on an analysis of the contemporaneous error structure. To specify the sources of fluctuations in the housing market, several important innovations are included in the model: a marginal income tax rate shock, an interest rate shock, a factor cost shock, a housing supply shock, an income shock, a housing demand shock,a residential price shock, and a housing price shock. Empirical results show that the interest rate shock appears to be the most significant innovation among all shocks, although the marginal federal income tax rate shock, the housing price shock, and the factor price for housing supply shock also play important roles in explaininig fluctuations in the housing market. [R0,R1] Journal: International Economic Journal Pages: 57-70 Issue: 1 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000029 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000029 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:1:p:57-70 Template-Type: ReDIF-Article 1.0 Author-Name: Robert Kohn Author-X-Name-First: Robert Author-X-Name-Last: Kohn Title: Risk-Neutrality versus Risk A version in a Model of Production Efficiency under Uncertainty Abstract: In an economy in which pollution from one sector is multiplicatively and stochastically damaging to another sector, there is efficiency when the expected ratio of the marginal rate of substitution to the marginal rate of transformation equals unity. When this ratio of variables is decomposed, the expected marginal rate of substitution approximately equals the expected marginal rate of transformation minus a correction based on covariance and a second correction based on variance. Under one definition of risk-neutrality both corrections vanish, whereas under another definition, it is only the correction based on covariance that vanishes. [Q25] Journal: International Economic Journal Pages: 71-79 Issue: 1 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000030 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000030 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:1:p:71-79 Template-Type: ReDIF-Article 1.0 Author-Name: Larue Bruno Author-X-Name-First: Larue Author-X-Name-Last: Bruno Author-Name: Tanguay Luc Author-X-Name-First: Tanguay Author-X-Name-Last: Luc Title: Regional Price Dynamics and Countervailing Duties: Did the Canada-U.S. Hog/Pork Dispute Have a Permanent Impact? Abstract: Leamer (1988:53) argues that permanent trade barriers trigger stronger and more lasting responses than temporary ones. We analyze the effects of U.S. countervailing duties (CVDs) imposed on Canadian hog and pork exports by testing the stability of long run arbitrage/cointegration relations between U.S., Quebec and Alberta hog prices. The CVDs induced large deviations from the long run arbitrage relations but these effects vanished with the removal of the pork CVD. Weak exogeneity tests show that the U.S. hog price did not error correct during the dispute period and confirm that CVDs contribute to insulate a large domestic market from foreign competition. [F13] Journal: International Economic Journal Pages: 81-101 Issue: 1 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000031 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000031 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:1:p:81-101 Template-Type: ReDIF-Article 1.0 Author-Name: Tan Hui Boon Author-X-Name-First: Tan Hui Author-X-Name-Last: Boon Author-Name: Baharumshah Ahmad Zubaidi Author-X-Name-First: Baharumshah Ahmad Author-X-Name-Last: Zubaidi Title: Dynamic Causal Chain of Money, Output, Interest Rate and Prices in Malaysia: Evidence Based On Vector Error- Correction Modelling Analysis Abstract: The dynamic causal chain among money, real output, interest rate, and inflation is Reexamined in the context of a small fast-growing economy using the recently developed techniques of Johansen's multivariate conitegration analysis followed by vector error-correction modelling, Granger causality, variance decompositions, and impulse response functions. The results of the multivariate cointegration tests suggested a stable long-run equilibrium relationship exists among these macroeconomic variables. The short-run results based on vector error-correction modeling, on the other hand, support the New Keynesians' view that money is non- neutral, at least in the short-run. It also indicates that monetary policy can contribute to the stability of domestic prices. M1, among the various definitions of money stock, has been identified as the most effective intermediate monetary target to curb inflation. M3, in turn, has been suggested as the most appropriate intermediate target to promote sustainable economic growth with contained inflation. For this economy, the deviation of the macroeconomic activity from its long-run equilibrium is adjusted through changes in the money stock and prices [E44] Journal: International Economic Journal Pages: 103-120 Issue: 1 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000032 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000032 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:1:p:103-120 Template-Type: ReDIF-Article 1.0 Author-Name: Yoon Chang-Ho Author-X-Name-First: Yoon Author-X-Name-Last: Chang-Ho Title: Entrepreneurial Development in Late Industrialization: A Comparative Analysis Abstract: The paper examines the differences in entrepreneurial responses that arise from the different historical backgrounds and transactional efficiency of the market. Beginning from a brief survey of the comparative study of early privatization policies and industrial organizations between Korea and Taiwan, we examine Formation of entrepreneurship in a general equilibrium framework with fixed set-up costs. We show that as the fixed set-up costs increase, the number of active entrepreneurs decreases, while the remaining risk-neutral entrepreneurs adopt riskier technologies and increase the expected level of employment. By examining industry dynamics, we explain why the growth pattern of some newly industrializing economies like Korea shows increasing volatility over the sustained period of time. Journal: International Economic Journal Pages: 1-20 Issue: 2 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000033 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000033 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:2:p:1-20 Template-Type: ReDIF-Article 1.0 Author-Name: Apergis Nicholas Author-X-Name-First: Apergis Author-X-Name-Last: Nicholas Title: Inflation Uncertainty and Momey Demand: Evidence from a Monetary Regime Changed and the Cases of Greece Abstract: This paper has extended a money demand equation to include uncertainty of inflation as a specific argument. The empirical analysis shows that in Greece inflation uncertainty is described well by an ARCH process. A money demand equation that explicitly takes into consideration the inflation uncertainty process seems to be capable of capturing any money demand structural instabilities. These instabilities, in turn, are shown to have been caused by the monetary deregulation process occurred in 1988. [E41, E42] Journal: International Economic Journal Pages: 21-30 Issue: 2 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000034 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000034 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:2:p:21-30 Template-Type: ReDIF-Article 1.0 Author-Name: Khalifa Ghali Author-X-Name-First: Khalifa Author-X-Name-Last: Ghali Author-Name: Al-Mutawa Ahmed Author-X-Name-First: Al-Mutawa Author-X-Name-Last: Ahmed Title: The Intertemporal Causal Dynamics Between Fixed Capital Formation and Economic Growth in The Group-Of-Seven Countries Abstract: The debate between De Long and Summers (1991, 1992) and Blomstrom, Lipsey and Zejan (1996) who reported conflicting results on the relationship between fixed capital formation and economic growth raised doubts on whether changes in a country's capital formation shares in GDP have an influence on its future growth rates. This paper addresses the issue again by examining the causal patterns between the share of fixed investment in GDP and the growth rate of per capital real GDP on an individual country basis, using time series on each of the group-of-seven countries. The empirical results suggest that the causal relationship between these variables may vary significantly across the major industrialized countries that presumably belong to the same growth group. Most importantly, no consistent evidence is found that causality is running in only one direction. Rather, causality between fixed investment and growth seems to have a country-specific nature and may run in either directions. Journal: International Economic Journal Pages: 31-37 Issue: 2 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000035 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000035 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:2:p:31-37 Template-Type: ReDIF-Article 1.0 Author-Name: Hahm Joon-Ho Author-X-Name-First: Hahm Author-X-Name-Last: Joon-Ho Title: Consumption Growth, Income Growth and Earings Uncertainty: Simple Cross-Country Evidence Abstract: The Consumption growth/income growth parallel found in the low frequency cross Country aggregate data has been interpreted as evidence against the certainty equivalence life-cycle/permanent income hypothesis. This paper analyzes existence of precautionary premia in consumption growth as a potential source of the parallel, and tests the hypothesis that countries with inherently larger earning uncertainty show systematically steeper consumption growth paths and higher saving rates. Empirical results indicate a potentially important role of precautionary saving motives in explaining the cross-country differentials in consumption growth and saving rate. However, the presence of precautionary premia is not enough to account for the high correlation between average consumption growth and average income growth across countries. I conclude that the consumption growth/income growth parallel remains as a robust long-run empirical relationship challenging the life-cycle/permanent income hypothesis. Journal: International Economic Journal Pages: 39-58 Issue: 2 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000036 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000036 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:2:p:39-58 Template-Type: ReDIF-Article 1.0 Author-Name: Chesney Marc Author-X-Name-First: Chesney Author-X-Name-Last: Marc Author-Name: Bharat Hazari Author-X-Name-First: Bharat Author-X-Name-Last: Hazari Author-Name: Pasquale SGRO Author-X-Name-First: Pasquale Author-X-Name-Last: SGRO Title: Immigration, Unemployment and Welfare Abstract: The recent flows of immigrants to many countries has been categorized by both legal/illegal migrants. Such migration flows have occurred despite the presence of domestic unemployment of various categories of labour. It has also been observed that migration has lowered the reward of unskilled workers. These problems are analysed on the basis of two alternative models: (i) where skilled workers and (ii) where unskilled workers are unemployed. It is shown that migration may raise both skilled/unskilled employment and welfare under plausible factor intensity conditions. More importantly, illegal migration may help in lowering the relative price of the non- traded good while the impact of migration on structural adjustment is ambiguous. Journal: International Economic Journal Pages: 59-74 Issue: 2 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000037 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000037 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:2:p:59-74 Template-Type: ReDIF-Article 1.0 Author-Name: Karras Georgios Author-X-Name-First: Karras Author-X-Name-Last: Georgios Title: Monetary Policy and the Exchange Rate: The Role of Openness Abstract: This paper examines whether the effects of monetary police on the exchange rate depend on the openness of the economy. Theoretically, openness can be shown to have an ambiguous effect on the ability of money to influence the exchange rate, so the issue has to be resolved empirically. Using annual data from the 1953-1990 period for a panel of 37 countries, the empirical results indicate that the effects of monetary policy on the exchange rate are negatively affected by the economy' s openness. Therefore, the more open the economy, the smaller the (short-run) depreciation effects of a given increase in the money growth rate (in the long run, relative PPP applies). This finding is robust to a number to different specifications. [E52, F41] Journal: International Economic Journal Pages: 75-88 Issue: 2 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000038 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000038 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:2:p:75-88 Template-Type: ReDIF-Article 1.0 Author-Name: Leon Javoer Author-X-Name-First: Leon Author-X-Name-Last: Javoer Title: Determinants of the Exchange Rate Regime: A Time Series Analysis for Chile Abstract: The objective of this paper is to examine the determinants of the exchange rate regime within a time series approach, in order to overcome limitations of the cross-section approach. The former approach is based upon the assumption that policy makers would not change the regime until the long term benefits would exceed the cost of the switch. This would imply some inertia in regimes that will be better captured by a time series analysis. The empirical results show that: (i) Chile opted captured by a time series analysis. The empirical results show that: (i) Chile opted for a fixed exchange rate regime as an anchor when domestic inflation was relatively high with respect to world inflation, and (ii) minimizing real consumption variability rather than real output variability was a dominant target for Chilean authorities, with domestic monetary disturbances favoring a more flexible arrangement, while real shocks were absorbed by changes in the balanced of payments supporting a fixed regime. [F31,F32] Journal: International Economic Journal Pages: 89-102 Issue: 2 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000039 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000039 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:2:p:89-102 Template-Type: ReDIF-Article 1.0 Author-Name: Merrill Whitney Author-X-Name-First: Merrill Author-X-Name-Last: Whitney Author-Name: James Gaisford Author-X-Name-First: James Author-X-Name-Last: Gaisford Title: An Inquiry Into the Rationale for Economic Espionage Abstract: Economic espionage can yield desirable strategic effects as well as cost savings for firms in a spying country. The spying country will typically gain even though counter-espionage operations will often be conducted by target countries. When two producing countries spy on each other, it is possible that both will be better off because of the technology transfer which is implicit in espionage. Economic espionage is generally beneficial to consumers. [F12, O031] Journal: International Economic Journal Pages: 103-123 Issue: 2 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000040 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000040 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:2:p:103-123 Template-Type: ReDIF-Article 1.0 Author-Name: Bernd Kempa Author-X-Name-First: Bernd Author-X-Name-Last: Kempa Author-Name: Michael Nelles Author-X-Name-First: Michael Author-X-Name-Last: Nelles Title: Sticky Prices and Alternative Monetary Feedback Rules: How Robust is the Overshooting Phenomenon? Abstract: The present paper incorporates a mechanism of rules-based central-bank interventions into a Dornbusch-type framework. We show that the implied reactions of exchange rates and interest and interest rate differentials in response to a monetary shock depend crucially on the particular monetary policy feedback rule. The Dornbusch case of postively correlated and overshooting nominal and real exchange rates as well as nominal and real interest rate differentials is only one of the possible scenarios of our model. Different scenarios imply zero and negative correlations and even multiple overshooting. [E58, F31, F41] Journal: International Economic Journal Pages: 1-18 Issue: 3 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000001 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000001 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:3:p:1-18 Template-Type: ReDIF-Article 1.0 Author-Name: Alif Darrat Author-X-Name-First: Alif Author-X-Name-Last: Darrat Title: Are Financial Deepening and Economic Growth Causally Related? Another Look at the Evidence Abstract: This study investigates empirically the role of financial deepening in economic growth in three middle-eastern countries (Saudi Arabia, Turkey, and the United Arab emirates). Unlike many previous studies, I focus on the causal link between the degree of financial deepening and economic growth in order to discriminate between several alternative theoretical hypotheses. To that end, I use multivariate Granger-causality tests within an error-correction framework. The results generally support the view that financial deepening is a necessary causal factor of economic growth, although the strength of the evidence varies across countries and across the proxies used to measure financial deepening. The causal relationships are also predominately long-term in nature. Therefore, government policies aimed at promoting financial deepening in these countries must be persistent and sustainable in order to foster economic development. [E44, O11, O16] Journal: International Economic Journal Pages: 19-35 Issue: 3 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000002 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000002 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:3:p:19-35 Template-Type: ReDIF-Article 1.0 Author-Name: Eor Myong-Keun Author-X-Name-First: Eor Author-X-Name-Last: Myong-Keun Author-Name: Ardeshir Dalal Author-X-Name-First: Ardeshir Author-X-Name-Last: Dalal Title: Income Redistribution Effects in the Presence of Region-Specific Factors Abstract: This paper examines the effect of changes in factor endowments on income Distribution in a four-factor, there-commodity model, in which two of the factors are region-specific while the other two are inter-regionally and inter-sectorally mobile. We provide an intermediate run model which bridges the gap between the Heckscher-Ohlin-Samuelson and the specific factor models, and which yields Results which differ from both these models. A simple derivation of factor Friendship patterns is made possible by exploiting the properties of the GNP Function. The procedure used may be applied to any n-commodity, (n+1)-factor Model. [F20] Journal: International Economic Journal Pages: 37-49 Issue: 3 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000003 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000003 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:3:p:37-49 Template-Type: ReDIF-Article 1.0 Author-Name: Fountas Stilianos Author-X-Name-First: Fountas Author-X-Name-Last: Stilianos Author-Name: Wu Jyh-Lin Author-X-Name-First: Wu Author-X-Name-Last: Jyh-Lin Title: Are the U.S. Current Account Deficits Really Sustainable? Abstract: We have tested for a long-run relationship between four U.S. Export measures and analogous import measures (measured in nominal and real terms, levels and deflated by GNP) in the 1967-1994 period using quarterly data. Using various econometric tests that include standard Engle-Granger cointegration tests and two tests that allow for test-determined breaks in the cointegrating relationship, we have shown that the hypothesis of no long-run relationship between exports and imports cannot be rejected. This finding contrasts sharply with earlier literature and carries the important policy implication that US current account deficits are not sustainable. [F30] Journal: International Economic Journal Pages: 51-58 Issue: 3 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000004 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000004 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:3:p:51-58 Template-Type: ReDIF-Article 1.0 Author-Name: Kiseok Hong Author-X-Name-First: Kiseok Author-X-Name-Last: Hong Title: Fluctuations In Consumer Durables Expenditure And Fixed Investment of Korea Abstract: This paper examines time series fluctuations of consumer durables expenditure and Fixed investment. Empirical Studies in the past have typically found that fluctuations in this expenditure series are inconsistent with the standard framework of utility or profit maximization. As a result, the Sources and patterns of the volatility of the series have remained largely unexplained. This paper attempts to provide an alternative description of the series, by exploiting time series implications of the stock adjustment process. A simple stock adjustment identity implies that purchases in durable goods should exhibit strong reversion over time, and that the reversion is the primary source of the volatility in durables expenditure series. Empirical results of the paper support this hypothesis. [E27] Journal: International Economic Journal Pages: 59-65 Issue: 3 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000005 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000005 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:3:p:59-65 Template-Type: ReDIF-Article 1.0 Author-Name: Yousif. Al-Yousif Author-X-Name-First: Yousif. Author-X-Name-Last: Al-Yousif Title: On the Role Exports in the Economic Growth of Malaysia: A Multivariate Analysis Abstract: In recent years a number if studies have attempted to examine the export-led Growth hypothesis in the Malaysian context. The evidence is, however mixed and inconclusive. This might be attributed to the fact that previous studies are bivariate in that they only focus on the relationship between exports and economic growth. Therefore, in the present paper we reexamine the relationship between exports and economic growth in the Malaysian context using a multivariate model in which other relevant factors (exchange rate, labor, and capital) are allowed to exert their influence on the two basic variables (exports and economic growth). Our results are supportive of the export-led growth as a short-run phenomenon in Malaysia. Over the long-run, however, our results supports, instead, the internally generated growth hypothesis. [O47] Journal: International Economic Journal Pages: 67-75 Issue: 3 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000006 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000006 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:3:p:67-75 Template-Type: ReDIF-Article 1.0 Author-Name: Won Lee Kyung Author-X-Name-First: Won Lee Author-X-Name-Last: Kyung Author-Name: James Schmidt Author-X-Name-First: James Author-X-Name-Last: Schmidt Author-Name: George Rejda Author-X-Name-First: George Author-X-Name-Last: Rejda Title: Unemployment Insurance and State Economic Activity Abstract: The unemployment insurance (UI) system collects premiums from firms and provides temporary compensation to involuntarily unemployed workers. The system has traditionally been viewed as an automatic stabilizer for national and area economies. This paper examines the impacts that UI benefits and contributions have had upon general economic activity in California and Michigan, large states that have experienced episodes of moderate and high unemployment rates, respectively, during the past two decades. For each state, we prepare a multiequation model of the economy and impose constraints represented by cointegrating vectors. Impulse responses measuring the impact of UI benefits and contributions on the economies are obtained from the models. The strengths of the responses are assessed using significance tests based upon distributions that have been derived for models containing cointegrating vectors. The results indicate that UI benefits and contributions provide little impact of consequence upon general economic activity in the two states. [E24] Journal: International Economic Journal Pages: 77-95 Issue: 3 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000007 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000007 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:3:p:77-95 Template-Type: ReDIF-Article 1.0 Author-Name: Shen Chung-Hua Author-X-Name-First: Shen Author-X-Name-Last: Chung-Hua Author-Name: Huang Tai-Hsin Author-X-Name-First: Huang Author-X-Name-Last: Tai-Hsin Title: Money Demand and Seasonal Cointegration Abstract: This paper employs a seasonal error correction modes (SECM) to examine the Stability of Taiwan' narrow and broad money demand functions. With the exception of the short term interest rate, these two monetary aggregates and their determinants are found to have strong seasonal unit roots at various frequencies. The demand functions for both narrow and broad money are cointegrated with real GNP and export at the annual frequency, whereas the demand for broad money is cointegrated with real GNP at the biannual frequency. Furthermore, both money aggregates are cointegrated with real GNP, exports and he interest rate at the zero frequency. A SECM is then constructed for the respective narrow and broad money demand Functions, of which the latter is found to be stable. [C30, C32, E41] Journal: International Economic Journal Pages: 97-123 Issue: 3 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000008 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000008 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:3:p:97-123 Template-Type: ReDIF-Article 1.0 Author-Name: Chi-Chur Cho Author-X-Name-First: Chi-Chur Author-X-Name-Last: Cho Author-Name: Eden Yu Author-X-Name-First: Eden Author-X-Name-Last: Yu Title: Export Promotion, Sectoral Unemployment and National Welfare Abstract: A competitive, general equilibrium model is developed to analyze the effectiveness of export-promotion policy. We show that the employment and welfare effects of Export promotion crucially depend on the foreign import demand elasticity and the Home country's propensity to consume is export commodity. Our result is that export Promotion hurts the economy in the long run but it may improve the short-run welfare under certain plausible conditions. [F11, O38] We are indebted to an anonymous referee for insightful comments. The usual disclaimer applies. Journal: International Economic Journal Pages: 1-13 Issue: 4 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000041 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000041 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:4:p:1-13 Template-Type: ReDIF-Article 1.0 Author-Name: Jai-Young Choi Author-X-Name-First: Jai-Young Author-X-Name-Last: Choi Title: Factor Growth, Urban Unemployment and Welfare Under Variable Returns to Scale Abstract: This paper analyzes the welfare implications of factor growth (i.e., labor growth and capital accumulation), in the mobile-capital Harris-Todaro (H-T) model by allowing the presence of variable returns to scale (VRS). It is shown that in contrast to the constant returns to scale (CRS) case, factor growth under VRS may lower the welfare of a small country and can affect the urban unemployed-employed ratio and the factor prices. Further, under VRS, the Rybczynski-type of factor endowment-output response requires much more stringent conditions (vis-a vis the CRS case). [F12, O41] Journal: International Economic Journal Pages: 17-34 Issue: 4 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000042 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000042 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:4:p:17-34 Template-Type: ReDIF-Article 1.0 Author-Name: Horvath Julius Author-X-Name-First: Horvath Author-X-Name-Last: Julius Author-Name: Grabowski Richard Author-X-Name-First: Grabowski Author-X-Name-Last: Richard Title: Core and Periphery in the World Economy: An Empirical Assessment of the Integration of the Developing Countries Into the World Economy Abstract: In this paper a dynamic structural vector-autoregressive model is utilized to Analyze the impact of shocks from the developed center (G-7) on the less developed periphery. Three possibilities emerge with less developed nations being negatively dependent on the center, positively integrated with the center, or independent of the center. A less developed country is classified as negatively dependent when shocks from the center have a negative impact and are relatively important in explaining variations in the output of the developing country. A less developed country is positively integrated if the shocks from the center have positive effects and explain a large share of the variation in output in the developing country. The results indicate that from the sample of eighty-six developed countries only five could be considered dependent, while the others are roughly equally divided into those positively integrated and those that are independent. [F02, F43, 050] Journal: International Economic Journal Pages: 35-51 Issue: 4 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000043 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000043 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:4:p:35-51 Template-Type: ReDIF-Article 1.0 Author-Name: Young-Han Kim Author-X-Name-First: Young-Han Author-X-Name-Last: Kim Title: The Welfare Analysis of Trade Policies: The Optimal Government Intervention Timing under Incomplete Information Abstract: This paper examines the welfare effects of the government trade policy when the government intervenes as a second mover under incomplete information. When the government decides her trade policy after an exporting firm decides its strategy, both the high quality firm (H) and the low quality firm (L) use their first mover advantage to raise the price in addition to H's upward price distortion for signaling purposes, and the government offers export subsidies to compensate for the price increase. It is shown that in the presence of a distortionary cost of raising government revenue, social welfare is highest when the government is a first mover, followed by non-intervention; social welfare is lowest when the government is a second mover. [F13, F12, L13] Journal: International Economic Journal Pages: 53-70 Issue: 4 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000044 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000044 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:4:p:53-70 Template-Type: ReDIF-Article 1.0 Author-Name: Gupta-Kapoor Anju Author-X-Name-First: Gupta-Kapoor Author-X-Name-Last: Anju Author-Name: Ramakrishnan Uma Author-X-Name-First: Ramakrishnan Author-X-Name-Last: Uma Title: Is There A J-Curve? A New Estimation for Japan Abstract: The controversial J-curve phenomenon is empirically tested using quarterly data for Japan between 1975:1 and 1996:4. The effects of an appreciation of yen on the ratio of imports to exports (M/X) is analyzed using an error correction model. The impulse response function indicates that the J-curve holds for Japan during the flexible exchange rate regime. [F31, F32, F40] Journal: International Economic Journal Pages: 71-79 Issue: 4 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000045 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000045 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:4:p:71-79 Template-Type: ReDIF-Article 1.0 Author-Name: Lee Young Whan Author-X-Name-First: Lee Young Author-X-Name-Last: Whan Title: Aggregate Risk and Social Value of Information in A Production Economy Abstract: This paper examines the effect of the degree of aggregate risk on social value of information in a production economy with a stock market. If the risk is firm-specific and there is no aggregate risk, public information will be socially harmful rather than valuable when there are no new markets for signal-contingent trades. We show that this result can be extended to the economy under small aggregate risk. In this case, the welfare gain from the increase in production effieciency due to public information is dominated by the welfare loss from the reduced risk-sharing opportunities. Also, these results can be extended to the case of private information due to the property of the generically fully revealing rational expectations equilibrium. [D82] Journal: International Economic Journal Pages: 81-100 Issue: 4 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000046 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000046 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:4:p:81-100 Template-Type: ReDIF-Article 1.0 Author-Name: Noh Suk Jae Author-X-Name-First: Noh Suk Author-X-Name-Last: Jae Title: Two And One Sided Conflict: Effectiveness and Scale in a Ratio Form of Conflict Technology Abstract: This paper investigates how resources are allocated in the conflict when the conflict technology is given by a ratio form that has both effectiveness and scale parameters. The analysis shows that the 'paradox of power' as identified by Hirshleifer (1991) is not a general result in the equilibrium of a conflict. In the interior solution of two sided conflict, it is shown that, as resource disparity increases, the less endowed agent becomes more aggressive by allocating a larger fraction of resources to offense and smaller fractions both do defense and production. As offense becomes more effective, the less endowed agent allocates a larger fraction of his resources to offense. However, as scale effect becomes larger, he allocates more resources to offense only when offense is not relatively too much ineffective. In the Nash interior solution of one sided conflict, when offense becomes more effective, the ratio of offense to defense decreases but this reduces the fraction the prey retains of his produced output. However, when scale effect becomes larger, the prey retains a smaller portion of his produced output with a smaller ratio of offense to defense only when offense is sufficiently more effective relative to defense. [C70, D60, D74] Journal: International Economic Journal Pages: 101-118 Issue: 4 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000047 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000047 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:4:p:101-118 Template-Type: ReDIF-Article 1.0 Author-Name: Bahmani-Oskooee Mohsen Author-X-Name-First: Bahmani-Oskooee Author-X-Name-Last: Mohsen Author-Name: Taggert Brooks Author-X-Name-First: Taggert Author-X-Name-Last: Brooks Title: Cointegration Approach to Estimating Bilateral Trade Elasticities Between U.S. and Her Trading Partners Abstract: Almost all previous authors who estimated the trade elasticities relied upon aggregate trade data. To avoid the aggregation bias, this paper provides estimates of trade elasticities using bilateral data between the United States and her six largest trading partners. Application of cointegration analysis reveals that in many cases, bilateral trade elasticities are large enough to justify real depreciation of the dollar as a mean of improving U.S. trade balance.[F14] Journal: International Economic Journal Pages: 119-128 Issue: 4 Volume: 13 Year: 1999 X-DOI: 10.1080/10168739900000048 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168739900000048 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:13:y:1999:i:4:p:119-128 Template-Type: ReDIF-Article 1.0 Author-Name: C. Y. Horioka Author-X-Name-First: C. Y. Author-X-Name-Last: Horioka Author-Name: H. Fujisaki Author-X-Name-First: H. Author-X-Name-Last: Fujisaki Author-Name: W. Watanabe Author-X-Name-First: W. Author-X-Name-Last: Watanabe Author-Name: T. Kouno Author-X-Name-First: T. Author-X-Name-Last: Kouno Title: Are Americans More Altruistic than the Japanese? A U.S.-Japan Comparison of Saving and Bequest Motives Abstract: This paper analyzes a variety of data on saving motives, bequest motives, and bequest division from a U.S.-Japan survey conducted in 1996 by the Japanese Ministry of Posts and Telecommunications and finds (1) that the selfish life cycle model is the dominant model of household behavior in both countries but that in is far more applicable in Japan, (2) that the altruism model is far more applicable in the U.S. but that it is not the dominant model of household behavior in either country, and (3) that the dynasty model is more applicable in Japan but that it is of only limited applicability even in Japan. [D12, D91, E21] Journal: International Economic Journal Pages: 1-31 Issue: 1 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000001 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000001 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:1:p:1-31 Template-Type: ReDIF-Article 1.0 Author-Name: Guy Ho Wang Author-X-Name-First: Guy Ho Author-X-Name-Last: Wang Title: On The Dynamic Incentive of Price-Quality Differentiation By A Monopolist Firm Abstract: When consumers are theterogeneous in their preferences about the quality of a product, a monopolist firm can take advantage of this heterogeneity, thereby, increase the profit by offering different price-quality pairs. This business practice is called the second degree price discrimination or non-linear pricing. This paper extends the static non-linear pricing problem into the dynamic one where the monopolist firm cannot precommit in advance. The main result is that the dynamic non-linear pricing outcome is the same as the static non-linear pricing outcome so that additional opportunities to transact neither benefits nor hurts the monopolist firm. [L12] Journal: International Economic Journal Pages: 33-45 Issue: 1 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000002 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000002 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:1:p:33-45 Template-Type: ReDIF-Article 1.0 Author-Name: A. C. Arize Author-X-Name-First: A. C. Author-X-Name-Last: Arize Author-Name: Malindretos John Author-X-Name-First: Malindretos Author-X-Name-Last: John Title: Does Inflation Variability Affect the Demand for Money in China? Evidence from Error-Correction Models Abstract: Theory suggests that inflation variability should affect real money balances, although there is ambiguity about the sign of the effect. Using cointegration and vector-error correction (VEC) modeling techniques, this paper presents new evidence on the effect of inflation variability on the demand for real money balances in China. The major result shows that increases in the inflation variability exert a significant effect upon money demand in both the short-run and the long-run. [E41] Journal: International Economic Journal Pages: 47-60 Issue: 1 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000003 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000003 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:1:p:47-60 Template-Type: ReDIF-Article 1.0 Author-Name: Comolli Paul Author-X-Name-First: Comolli Author-X-Name-Last: Paul Title: A Theorem on the Gains from International Factor Mobility Abstract: This paper proves that for the case of a small country, which cannot influence world factor prices, an expansion in the scope of international factor mobility can never reduce its real national income. [F11, F20] Journal: International Economic Journal Pages: 61-69 Issue: 1 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000004 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000004 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:1:p:61-69 Template-Type: ReDIF-Article 1.0 Author-Name: Devadoss Stephen Author-X-Name-First: Devadoss Author-X-Name-Last: Stephen Author-Name: Cooper Kevin Author-X-Name-First: Cooper Author-X-Name-Last: Kevin Title: Simultaneous Price And Quantity Determination In A Joint Profit Maximizing Bilateral Monopoly Under Dynamic Optimization Abstract: A long standing controversial issue in the literature surrounding the bilateral monopoly is the determinacy of equilibrium price and quantity when the seller and buyer maximize their joint profits. This controversy led to incorrect presentation of bilateral monopoly solutions in the literature. In this study, we employ a dynamic optimization model to simultaneously determine the equilibrium price and quantity transacted between the buyer and seller. We also show that for the bilateral monopoly to achieve equilibrium they must transact the intermediate product at the hint profit maximizing level. Any deviation from this level will result in one party exercising greater control than the other, and thus, will lead to a situation of either pure monopsony or monopoly, or nonexistence of both parties. [D43, C78,C61] Journal: International Economic Journal Pages: 71-84 Issue: 1 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000005 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000005 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:1:p:71-84 Template-Type: ReDIF-Article 1.0 Author-Name: Dong Qi Hong Author-X-Name-First: Dong Qi Author-X-Name-Last: Hong Title: The Welfare Effects of U.S. Most-Favored-Nation Tariff Treatment of Exports From China: An Empirical Inquiry Abstract: This Study provides estimates of the elasticities of the U.S. import demand for Chinese goods and of China's export supply to he U.S. and China of granting Most-Favored-Nation (MFN) tariff treatment for China's exports. In general, if Washington denies MFN status to Beijing, Sino-American commercial as well as political relations world be seriously harmed. [F13, F14] Journal: International Economic Journal Pages: 85-97 Issue: 1 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000006 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000006 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:1:p:85-97 Template-Type: ReDIF-Article 1.0 Author-Name: Jung Choong-Young Author-X-Name-First: Jung Author-X-Name-Last: Choong-Young Author-Name: Kim Jae-Cheol Author-X-Name-First: Kim Author-X-Name-Last: Jae-Cheol Author-Name: Lee Sang-Ho Author-X-Name-First: Lee Author-X-Name-Last: Sang-Ho Title: An Incentive Contract With Asymmetric Information Abstract: This Paper considers the problem of designing an optimal incentive contract between a retailer and a manufacturer when the former has private information about demand and its own cost. Based on a multi-period framework, we show that the incentive franchise contract can bring about the fist-best outcome of vertical integration when the retailer has complete information about consumers' preferences. [L42, D8] Journal: International Economic Journal Pages: 99-110 Issue: 1 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000007 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000007 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:1:p:99-110 Template-Type: ReDIF-Article 1.0 Author-Name: Nam Chong-Hyun Author-X-Name-First: Nam Author-X-Name-Last: Chong-Hyun Author-Name: Kim Chang-Jin Author-X-Name-First: Kim Author-X-Name-Last: Chang-Jin Title: Capital Accumulation And Trade Policy:The Case Of Korea Abstract: This paper investigates whether there are any systematic links between Domestic savings and export growth in light of the Korean experience, beginning with the early 1960s when trade policy shifted from an inward to outward orientation. The paper also examines how domestic investment might have been affected by the trade reforms. The study reveals that the impressive growth of Korea's domestic savings over the 1960-95 period owes in no small part to the Trade reforms and the subsequent rapid growth of exports. Evidence also Suggests that the long-lasting investment boom experienced by Korea over the 1960-95 period was initiated and maintained to a significant degree by the trade reform of the 1960s and thereafter. [F43, E21]. Journal: International Economic Journal Pages: 111-131 Issue: 1 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000008 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000008 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:1:p:111-131 Template-Type: ReDIF-Article 1.0 Author-Name: Frank Wolak Author-X-Name-First: Frank Author-X-Name-Last: Wolak Title: An Empirical Analysis of the Impact of Hedge Contracts on Bidding Behavior in a Competitive Electricity Market Abstract: A major concern in the design of wholesale electricity markets is the potential for the exercise of market power by generating unit owners. To better understand the determinants of generating unit owner market power and how it is exercised, this paper derives a model of bidding behavior in a competitive electricity market which incorporates various sources of uncertainty and the impact of the electricity generator's position in the financial hedge contract market on its expected profit-maximizing bidding behavior. The model is first used to characterize the profit-maximizing market price that a generator would like set by its bidding strategy for several hedge contract and spot sales combinations. This model is applied to bid and contract data obtained from the first three months of operation of the National Electricity Market (NEM1) in Australia. This analysis illustrates the sensitivity of expected profit-maximizing bidding strategies to the amount of financial hedge contracts held by the generating unit owner. It also provides strong evidence for the effectiveness of financial hedge contracts as a means to mitigate market power during the initial stages of operation of a wholesale electricity market. [L 94] Journal: International Economic Journal Pages: 1-39 Issue: 2 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000017 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000017 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:2:p:1-39 Template-Type: ReDIF-Article 1.0 Author-Name: Shuai Xiaobing Author-X-Name-First: Shuai Author-X-Name-Last: Xiaobing Title: Multinationals, Information Update, and Product Adaptation Abstract: This paper develops a dynamic model of decision making by multinational firms. The firm chooses between exporting and producing abroad when it expands the market. Bayes learning is incorporated into this model in addition to fixed cost and transport cost Production in a foreign country gives the firm new information about the demand function. This information is applied to adjust the firm's expectation as well as output choice in the future. This process not only reduces the risk encountered by a firm in a foreign market, but also increases acceptance of the product which the firm manufactures. This paper concludes even if producing abroad loses money in the first period, the firm may still choose to set up plants in foreign countries rather than exporting, due to the dynamic information advantage associated with going multinational. [F23,F21] Journal: International Economic Journal Pages: 41-66 Issue: 2 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000018 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000018 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:2:p:41-66 Template-Type: ReDIF-Article 1.0 Author-Name: J Pentecost Eric Author-X-Name-First: J Pentecost Author-X-Name-Last: Eric Author-Name: Ramlogan Carlyn Author-X-Name-First: Ramlogan Author-X-Name-Last: Carlyn Title: The Savings Ratio and Financial Repression in Trinidad and Tobago Abstract: This paper investigates the hypothesis financial repression in the context of the Determinates of the private savings ratio in Trinidad and Tobago, using the Multivariate, cointegration time-series methodology. Four alternative proxies are Used to represent financial repression, including the real interest rate, the real interest Rate differential between the world and domestic economy and two alternative Measures of exchange rate misalignment, We find that there is strong evidence to Support the hypothesis of financial repression in Trinidad and Tobago over the sample Period and that financial liberalization may significantly enhance the growth of real Per capita income. [E2, F4, O1] Journal: International Economic Journal Pages: 67-84 Issue: 2 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000019 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000019 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:2:p:67-84 Template-Type: ReDIF-Article 1.0 Author-Name: Jo Sunghan Author-X-Name-First: Jo Author-X-Name-Last: Sunghan Title: Methodological Extensions of First-Order Adjustment Models: An Application to U.S. Industries Abstract: This paper empirically tests two industrial-organization models with a sample of 182 U.S. industries, from to 1963 to 1967. The models extend standard models and integrate them with dynamics associated with the " persistence of profits" methodologies. We extend it by replacing the traditional cross-section profit equation with a profit-adjustment equation for U.S. industrial data. Our study measures the speed of adjustment of profits and explicitly models steady-state profits, in addition to the speed of structural adjustment and steady-state market structure. We find that the structural-adjustment speed is slower than the profit-adjustment speed and that nonzero economic profits tend to be quite persistent Journal: International Economic Journal Pages: 85-111 Issue: 2 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000020 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000020 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:2:p:85-111 Template-Type: ReDIF-Article 1.0 Author-Name: Armah Bartholomew Author-X-Name-First: Armah Author-X-Name-Last: Bartholomew Title: Does Latin America Have More to Gain From Exchange Rate Liberalization than Sub-Saharan Africa? Abstract: An examination of the relationship between exchange rate liberalization and economic growth in selected Latin American and Sub-Saharan African countries reveals evidence of a short-run causal relationship between the two variables in both Latin America and Sub-Saharan Africa. Within each region, exchange rate liberalization causes growth in some countries while others exhibit reverse causality running from growth to exchange rate leads to increased growth and growth induces exchange rate liberalization in most Latin American countries, in the majority of Sub-Saharan African countries studied, exchange rate liberalization reduces growth while growth causes distortions in the exchange rate. Market imperfections, expansionary fiscal and monetary policies under a fixed exchange rate regime, and poor terms of trade are cited as possible explanations for the findings for Sub-Saharan Africa. [F, O] Journal: International Economic Journal Pages: 113-132 Issue: 2 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000021 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000021 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:2:p:113-132 Template-Type: ReDIF-Article 1.0 Author-Name: Dua Pami Author-X-Name-First: Dua Author-X-Name-Last: Pami Author-Name: Rashid Aneesa Ismail Author-X-Name-First: Rashid Aneesa Author-X-Name-Last: Ismail Author-Name: Salvatore Dominick Author-X-Name-First: Salvatore Author-X-Name-Last: Dominick Title: The Impact of Financial and Fiscal Variables on Economic Growth: The Case of India and Korea Abstract: This paper applies a simple macroeconomic model developed by Green and Murinde (1993) to Korea and India and studies the potency of fiscal and financial policies. The fiscal variables are real government spending, the income tax rate, and the export tax rate; while financial policy variables are the official interest rate, loans from commercial banks, foreign reserves or the exchange rate and foreign capital inflows. Dummies for political instability and financial reforms specific to the two countries are also included. We find that while government expenditure, income taxes and foreign capital inflow have the same effects in the two countries, interest rates, money supply, foreign reserves and financial liberalization have different effects, bringing out the differences in the two economies, [E63, 011, 053] Journal: International Economic Journal Pages: 133-150 Issue: 2 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000022 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000022 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:2:p:133-150 Template-Type: ReDIF-Article 1.0 Author-Name: T. Chang Author-X-Name-First: T. Author-X-Name-Last: Chang Author-Name: W. Fang Author-X-Name-First: W. Author-X-Name-Last: Fang Author-Name: W. Liu Author-X-Name-First: W. Author-X-Name-Last: Liu Author-Name: Thompson Henry Author-X-Name-First: Thompson Author-X-Name-Last: Henry Title: Exports, Imports and Income in Taiwan: An Examination of the Export Led Growth Hypothesis Abstract: Cointegration and vector autoregression are used to examine relationships among exports, imports, and income in Taiwan from 1971 to 1995. These three series are cointegrated. There is bidirectional Granger causality between exports and imports, and between imports and income. Impulse responses and variance decompositions uncover only weak links from exports to income. The export led growth hypothesis is not supported for Taiwan during this period of rapid growth. [F1, F4, O0] Journal: International Economic Journal Pages: 151-160 Issue: 2 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000023 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000023 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:2:p:151-160 Template-Type: ReDIF-Article 1.0 Author-Name: Wontack Hong Author-X-Name-First: Wontack Author-X-Name-Last: Hong Title: Engine of Export-Oriented Catching-Up: Small Firms Abstract: Big conglomerates dominate the Korean economic as do small firms the Taiwan economy. I characterize Korea as a relatively low-trust society with a pro-chaebol policy bias, and Taiwan as a relatively high-trust society with an anti-big-conglomerate policy bias. I content that the differences between Korea and Taiwan in size structure of firms reflect the divergent responses of entrepreneurs to different, "semi-permanent" socio-political conditions that determine the costs of market transactions among firms. It may be desirable to change the size structure of firms, but I maintain that the possibility of actual change in the size structure is rather limited. [F14, L11] Journal: International Economic Journal Pages: 161-179 Issue: 2 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000024 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000024 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:2:p:161-179 Template-Type: ReDIF-Article 1.0 Author-Name: Krusell Per Author-X-Name-First: Krusell Author-X-Name-Last: Per Author-Name: Kuruscu Burhanettin Author-X-Name-First: Kuruscu Author-X-Name-Last: Burhanettin Author-Name: Anthony Smith Author-X-Name-First: Anthony Author-X-Name-Last: Smith Title: Tax Policy with Quasi-Geometric Discounting Abstract: We study the effects of tazation in a model with a representative agent with time Inconsistent preferences: discounting is quasi-geometric. Utility is derived from Consumption and leisure, and tazation can be based on consumption and investmentc Spending as well as on capital and labor income. The model allows for closed form Solutions, and welfare comparisons can be made across taxation systems. Optimal taxation analysis in this model leads to time inconsistency issues for the government, assuming that the government shares the consumer's preferences and Cannot commit to future taxes. We study time-consistent policy equilibria for Different tax constitutions. A tax constitution specifies what tax instruments are Available, and we assume that the government can commit to a tax constitution. The Results show that a constitution leaving the government with no ability to tax results in Strictly higher welfare than one where the government has full freedom to tax. Indeed, for some parameter values, the best tax constitution of all is laissez faire (even though the government is benevolent and fully rational). For other parameter values, it may be optimal to allow the government to use a less than fully restricted set of tax bases. [D6,E6,H2] Journal: International Economic Journal Pages: 1-40 Issue: 3 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000025 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000025 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:3:p:1-40 Template-Type: ReDIF-Article 1.0 Author-Name: Shirvani Hassan Author-X-Name-First: Shirvani Author-X-Name-Last: Hassan Author-Name: Wilbrate Barry Author-X-Name-First: Wilbrate Author-X-Name-Last: Barry Title: Does Consumption Respond More Strongly to Stock Market Declines Than to Increases? Abstract: This paper provides empirical evidence that positive and negative wealth effects of stock prices on consumer expenditures are unequal. For the three largest economies in the world, stock price declines are found to have a more powerful effect than price increases. [F20, E30] Journal: International Economic Journal Pages: 41-49 Issue: 3 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000026 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000026 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:3:p:41-49 Template-Type: ReDIF-Article 1.0 Author-Name: Bahmani-Oskooee Mohsen Author-X-Name-First: Bahmani-Oskooee Author-X-Name-Last: Mohsen Author-Name: Mirzaie Aghdas Author-X-Name-First: Mirzaie Author-X-Name-Last: Aghdas Title: The Long-Run Effects of Depreciation of The Dollar on Sectoral Output Abstract: Almost all previous research that investigated the impact of currency depreciation on domestic production relied on an aggregate measure of total output, i.e. GDP. In this paper we investigate the long-run relation between the exchange value of the dollar and production in eight different sectors of the U.S. economy by the means of cointegration analysis. For most sectors we find no evidence of a long-run relation between the value of the dollar and sectoral output. [F31] Journal: International Economic Journal Pages: 51-61 Issue: 3 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000027 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000027 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:3:p:51-61 Template-Type: ReDIF-Article 1.0 Author-Name: Whang Seong Hyeon Author-X-Name-First: Whang Seong Author-X-Name-Last: Hyeon Title: Conservative Monetary Policy Rule and Inflation Mitigation Policies Abstract: This paper studies an enforceable conservative monetary policy rule and the welfare implications of inflation mitigation policies. By applying Rogoff's idea of appointing a conservative central banker to Barro and Gordon's framework, we derive the optimal degree of conservatism of society when the policy rule is enforceable in a multi-period set-up. In our work, the exact range of the parameter used to measure the degree of conservatism for the enforceable policy rule is expressed by some important parameters in the model such as the marginal cost of inflation, the slope coefficient in the Phillips curve, and the time discount factor. Using the basic set-up, we re-investigate Fischer and Summers' finding on the welfare effects of some inflation mitigation policies for the case of the reputational equilibrium under the conservative monetary policy rule. [E50] Journal: International Economic Journal Pages: 63-74 Issue: 3 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000028 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000028 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:3:p:63-74 Template-Type: ReDIF-Article 1.0 Author-Name: Don Clark Author-X-Name-First: Don Author-X-Name-Last: Clark Author-Name: Marchese Serafino Author-X-Name-First: Marchese Author-X-Name-Last: Serafino Author-Name: Zarrilli Simonetta Author-X-Name-First: Zarrilli Author-X-Name-Last: Simonetta Title: Do Dirty Industries Conduct Offshore Assembly In Developing Countries? Abstract: This paper investigates whether the cost of environmental regulation influences the international location of polluting industries. Industries that operate production facilities in developing countries are identified through their use of the offshore assembly provisions in the U.S. tariff Code. Pollutions Intensity of industry output is found to significantly reduce the probability of conducting offshore assembly in developing countries. This finding contradicts the arguments that developing countries are becoming pollution havens as a result of offshore assembly independent of their general disregard for the environment. Integrating production across national boundaries might actually enhance worldwide environmental quality. Relatively clean stages of the production process are being transferred to developing countries with lax environmental regulations, while polluting segments remain in the U.S. where strict environmental controls are enforced. [F1, Q2] Journal: International Economic Journal Pages: 75-86 Issue: 3 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000029 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000029 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:3:p:75-86 Template-Type: ReDIF-Article 1.0 Author-Name: Jeong-Yoo Kim Author-X-Name-First: Jeong-Yoo Author-X-Name-Last: Kim Title: Product Compatibility and Technological Innovation Abstract: This paper explores the relationship between the firms' compatibility choice and quality improving technological progress in a static model. I demonstrate that firms' compatibility choice in anticipation of quality improving innovation critically depends on how users' expectations regarding the network size are formed. In particular, if users have rational expectations the firm with the small innovation will prefer full compatibility whereas the firm with the large innovation will prefer complete incompatibility,, and as a result, with the small innovation, excessive standardization may occur. [D13] Journal: International Economic Journal Pages: 87-100 Issue: 3 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000030 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000030 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:3:p:87-100 Template-Type: ReDIF-Article 1.0 Author-Name: Kim Chung-Han Author-X-Name-First: Kim Author-X-Name-Last: Chung-Han Title: Balassa-Samuelson Theory and Predictability of the US/UK Real Exchange Rate Abstract: This paper performs a theory-based forecast of the US/UK real exchange rate. The theory is the Balassa-Samuelson hypothesis that productivity differentials between two countries would determine long-run movements of real exchange rates. The relative income and real exchange rate set a bivariate system, which considers the heteroskedasticity in the real exchange rate movements. The model, to which the Kalman filter and Markov-switching algorithm are applied, is compared with the random walk model and reports significant improvements in forecasting in the medium and long term. [C53, F31] Journal: International Economic Journal Pages: 101-121 Issue: 3 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000031 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000031 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:3:p:101-121 Template-Type: ReDIF-Article 1.0 Author-Name: M. A. Mcpherson Author-X-Name-First: M. A. Author-X-Name-Last: Mcpherson Author-Name: M. R. Redfearn Author-X-Name-First: M. R. Author-X-Name-Last: Redfearn Author-Name: M. A. Tieslau Author-X-Name-First: M. A. Author-X-Name-Last: Tieslau Title: A Re-Examination of the Linder Hypothesis: A Random-Effects Tobit Approach Abstract: This paper examines one of the main theories of international trade, the Linder hypothesis, using data from the OECD countries. The paper makes two primary contributions. First, significant empirical evidence is found in support of Linder's hypothesis regarding demand similarity for 18 of the 19 OECD countries under investigation here. Second, the use of a censored dependent variable in this analysis corrects a major methodological shortcoming in the existing literature by including data on all potential trading partners, even when the given OECD country has a zero or negative desire to export to that potential trading partner. [F10] Journal: International Economic Journal Pages: 123-136 Issue: 3 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000032 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000032 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:3:p:123-136 Template-Type: ReDIF-Article 1.0 Author-Name: D. Carroll Christopher Author-X-Name-First: D. Carroll Author-X-Name-Last: Christopher Title: Risky Habits and the Marginal Propensity to Consume Output of Permanent Income, or, How Much Would a Permanent Tax Cut Boost Japanese Consumption? Abstract: Papers in a variety of disparate literatures have recently suggested that habit formation in consumption may explain several empirical puzzles, ranging from the level and cyclical variability of the equity premium (Abel, 1990, 1999: Constantinides, 1990; Jerman, 1998; Campbell and Cochrane, 1999) to the 'excess smoothness' of aggregate consumption (Fuhrer, 2000) to the apparent fact that increases in economic growth cause subsequent increase in aggregate saving rates (Carroll and Weil, 1994: Bosworth, 1993; Attanasio, Picci, and Scorceu, 2000; Rodrik, 1999; Layza, Schmidt-Hebbel, and Serven, 2000) This paper examines an implication of these models that has mostly been overlooked: Habits strong enough to solve these puzzles imply an immediate marginal propensity to consume out of permanent shocks of much lees than one. When the model is calibrated to roughly match the rise in the Japanese saving rate over the postwar periode, it implies that the immediate MPC out of Permanent tax cuts may be as low as 30 percent, suggesting that calls for a permanent income tax cut as a quick means of stimulating aggregate demand in Japan may be misguided. [D11, D81, D91, E10, E17, E21, H31] Journal: International Economic Journal Pages: 1-40 Issue: 4 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000033 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000033 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:4:p:1-40 Template-Type: ReDIF-Article 1.0 Author-Name: Irandoust Manuchehr Author-X-Name-First: Irandoust Author-X-Name-Last: Manuchehr Author-Name: Sjoo Boo Author-X-Name-First: Sjoo Author-X-Name-Last: Boo Title: The Behavior of the Current Account in Response to Unobservable and Observable Shocks Abstract: The intertemporal approach to the balance of payments states that non-stationary flows in the current account will cointegrate or cotrend, unless there are permanent productivity shocks or long-run policy distortions. This paper examines the dynamics of the current account for a small open economy, using data from Sweden. The results show borderline cointegration for the current account. Recursive estimates disclose that there is no stable tendency towards finding cointegration. Cointegration is found for the first part of the sample, but from 1990 the cointegration test performs badly until speculative attacks force Sweden to give up the peg of the krona in 1992. In terms of the intertemporal approach, policy could be creating the imbalance, solved with the depreciation in 1992, after which the external accounts gradually move back to long-run equilibrium. [F31, F32, F41] Journal: International Economic Journal Pages: 41-57 Issue: 4 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000034 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000034 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:4:p:41-57 Template-Type: ReDIF-Article 1.0 Author-Name: Kim Kyung Soo Author-X-Name-First: Kim Kyung Author-X-Name-Last: Soo Title: Foreign Exchange Intervention For Internal Balance Abstract: This paper is concerned with the optimal combination of sterilization and wage Indexation in a small open economy subject to various disturbances. In most cases the Effects of these policy instruments are interdependent such that they act like a single Instrument. At the optimum, in addition to the well-known substitutability of foreign Exchange intervention and wage indexation , the complementarity of foreign exchange Intervention and sterilization is obtained. The relationship between the degree of Capital mobility and the optimal combination of the policy instruments is also examined. [E52, F4] Journal: International Economic Journal Pages: 59-75 Issue: 4 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000035 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000035 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:4:p:59-75 Template-Type: ReDIF-Article 1.0 Author-Name: Mackie James Author-X-Name-First: Mackie Author-X-Name-Last: James Author-Name: J. Rousslang Donald Author-X-Name-First: J. Rousslang Author-X-Name-Last: Donald Title: The Optimal Taxation of Income From International Investment: A Geometric Analysis Abstract: This paper examines how a capital-exporting country should tax foreign investment Income when saving is variable and the goal is to maximize global welfare. Other Recent studies have assumed either that countries cooperate to achieve this goal, or that they act unilaterally to maximize the national benefit. The present paper returns to the framework used by earlier authors, in which the capital-exporting country acts unilaterally and takes foreign tax rates as given. Unlike the previous studies, it is found that if the capital-exporting country's investments do not alter foreign rates of return, the optimal tax structure may involve higher taxes for foreign than for domestic investment income. H21,H87] Journal: International Economic Journal Pages: 77-86 Issue: 4 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000036 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000036 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:4:p:77-86 Template-Type: ReDIF-Article 1.0 Author-Name: Lee In Kwon Author-X-Name-First: Lee In Author-X-Name-Last: Kwon Title: Damage Estimation and Its Accuracy Antitrust Policy Implication Abstract: This paper empirically estimates antitrust damage based on the rich information on cost factors in the bid-rigged Texas school milk market. Empirical results demonstrate that damage estimate by antitrust agency is a significantly underestimated amount of the true damage. This understatement of true harm inevitably includes implementation biases in the antitrust system. [K21, L13, L40] Journal: International Economic Journal Pages: 87-102 Issue: 4 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000037 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000037 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:4:p:87-102 Template-Type: ReDIF-Article 1.0 Author-Name: Kim Gi-Hong Author-X-Name-First: Kim Author-X-Name-Last: Gi-Hong Title: The Role of Gatt in Trade Negotiations: A Game-Theoretic Perspective Abstract: The purpose of this paper is to explain theoretically the role of GATT in tariff negotiations, without narrowly interpreting GATT as an agreement. This paper, which establishes a game model where two nations are involved in tariff negotiations, shows the following points. First, free trade is difficult to realize even in a world with complete information. Second, GATT can serve as a mechanism for nations to find a particular cooperative tariff under incomplete information. Third, gradual tariff reduction can be explained as the interaction between the gradual decline of domestic political pressure and multilateral tariff negotiations under GATT. [F13] Journal: International Economic Journal Pages: 103-123 Issue: 4 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000038 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000038 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:4:p:103-123 Template-Type: ReDIF-Article 1.0 Author-Name: Osborne Evan Author-X-Name-First: Osborne Author-X-Name-Last: Evan Title: Labor Surplus in Korea: A Reassessment Abstract: The paper estimates the Korean turning point, as defined in the labor-surplus model of Lewis (1954) and Fei and Ranis (1964), using a wide variety of data. The best estimate is somewhere in the period 1964-1968. In addition, unlike previous estimation work several data series are shown to support the entire model in addition to dating the turning point. Caution is urge in the use of econometric estimations of production-function parameters as a way to time the turning point. [O5] Journal: International Economic Journal Pages: 125-141 Issue: 4 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000039 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000039 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:4:p:125-141 Template-Type: ReDIF-Article 1.0 Author-Name: E. Young Song Author-X-Name-First: E. Young Author-X-Name-Last: Song Title: The Return to Capital and Convergence in a Two Sector Model of Endogenous Growth Abstract: This paper obtains a simple algebraic derivation of the transitional dynamics of a two-sector endogenous growth model. This paper finds that the return to capital and the growth rate of output fall over time on the transition path if the initial ratio of physical capital to human capital is lower than the steady state level. It also shows that two sector endogenous growth models are consistent with the evidence on conditional convergence found by Barro (1991) and Mankiw, Romer, and Weil (1991). Neoclassical growth models and endogenous growth models are impossible to distinguish in terms of the falling rate of return on capital or in terms of conditional convergence. [O41] Journal: International Economic Journal Pages: 143-163 Issue: 4 Volume: 14 Year: 2000 X-DOI: 10.1080/10168730000000040 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730000000040 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:14:y:2000:i:4:p:143-163 Template-Type: ReDIF-Article 1.0 Author-Name: Wasmer Etienne Author-X-Name-First: Wasmer Author-X-Name-Last: Etienne Author-Name: Weil Philippe Author-X-Name-First: Weil Author-X-Name-Last: Philippe Title: Credit Markets and Unemployment in the Short Run and in the Long Run Abstract: This paper examines the short run and long run responses of unemployment to credit and labor market shocks in a world in which both credit and labor market frictions keep the economy away from full employment. We examine the respective contributions to equilibrium unemployement of stochastic credit market frictions and of credit conditions. We examine the contrasting effects of financial liberalization in the short run and in the long run.[E44] Journal: International Economic Journal Pages: 1-19 Issue: 1 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000001 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000001 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:1:p:1-19 Template-Type: ReDIF-Article 1.0 Author-Name: Lisa Basurto Author-X-Name-First: Lisa Author-X-Name-Last: Basurto Author-Name: Charles Delorme Author-X-Name-First: Charles Author-X-Name-Last: Delorme Author-Name: David Kamerschen Author-X-Name-First: David Author-X-Name-Last: Kamerschen Title: Rent Seeking, The Bracero Program And Current Mexican Farm Labor Policy Abstract: This Paper focus on how official support for labor importation (specifically the Bracero program) varies with the economic rent available to specific special interest groups. The Bracero program was the largest temporary "guest worker" labor program in US history. This study examines the motives underlying the House and Senate vote on the final extension of the vote on the Bracero Program in 1963 and the current House vote on the Mexican farm labor policy in 1996. It tests whether legislators respond to the rent-seeking behavior of competing special interest groups. The actual testimony on the Bracero program is used to identify some of the competing special interest groups and to develop a prohibit model of the vote. [J4, K2, N4] Journal: International Economic Journal Pages: 21-40 Issue: 1 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000002 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000002 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:1:p:21-40 Template-Type: ReDIF-Article 1.0 Author-Name: Chang Byoung-Ky Author-X-Name-First: Chang Author-X-Name-Last: Byoung-Ky Title: Exchange Rate Pass-Through in an International Duopoly model with Brand Loyalty Abstract: In many markets, consumers who have previously purchased from one firm have (or perceive) costs of switching to a competitor's product. This study explicitly analyzes, in an international duopoly model with brand loyalty, the effect of rival exchange rate on exchange rate pass-through. In the case of the imperfect foresight, the exchange rate pass-through is affected by the exchange rate uncertainty. Due to the brand loyalty, current price decisions will affect future profits through market shares. The expected future profit is affected by expected competition situations that depend on the interactive movement of future exchange rates. [F31, F12] Journal: International Economic Journal Pages: 41-59 Issue: 1 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000003 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000003 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:1:p:41-59 Template-Type: ReDIF-Article 1.0 Author-Name: Joon-Hwan Im Author-X-Name-First: Joon-Hwan Author-X-Name-Last: Im Title: Optimal Currency Target Zones: How Wide Should Exchange Rate Bands Be? Abstract: This paper presents a model of an optimal currency band in which a central bank with an infinite time horizon faces a trade-off between interest rate deviation costs and exchange rate deviation costs. The bank chooses optimal intervention points in order to minimize the value of the loss function. The paper uses the Bellman inequalities for instantaneous control of the regulated Brownian motion to derive an optimal currency band and optimal intervention policy characterized by two barriers. This model derives some interesting results. First, the width of currency band depends positively on the uncertainty of the shock, the degree of speculative pressure, and central bank's concern about the domestic money market versus the foreign exchange market. Second, the central bank finds it optimal not to intervene when the fundamental rate is inside a certain band, whereas once it lies outside the band, the optimal policy is to move it to the nearest boundary. [F31] Journal: International Economic Journal Pages: 61-93 Issue: 1 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000004 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000004 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:1:p:61-93 Template-Type: ReDIF-Article 1.0 Author-Name: Sung Yeung Kwack Author-X-Name-First: Sung Yeung Author-X-Name-Last: Kwack Title: An Empirical Assessment Of Monetary Policy Responses To Capital Inflows In Asia Before The Financial Crisis Abstract: This paper highlights monetary policy implemented by monetary authorities in response to a surge of capital inflows in Asia during the period 1985-1996. It statistically assesses the effectiveness of monetary policy responses. Regression results show that Asian countries as a group took the operation of a high rate of sterilization and the foreign exchange market intervention which yielded a small change in the exchange rate. Consequently, they succeeded in keeping nominal exchange rates at desired levels and in limiting increases in monetary growth, despite a surge in capital inflows. The adoption of floating exchange rates, it is concluded, could have avoided the occurrence of financial crisis in Asia. [F32, F41] Journal: International Economic Journal Pages: 95-113 Issue: 1 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000005 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000005 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:1:p:95-113 Template-Type: ReDIF-Article 1.0 Author-Name: Sushanta Mallick Author-X-Name-First: Sushanta Author-X-Name-Last: Mallick Title: Dynamics of Macroeconomic Adjustment with Growth: Some Simulation Results Abstract: This paper examines the impact of several macroeconomic policies, both demand and supply management policies, on economic activity within a small macroeconomic simulation model. The model is based on a standard analytical framework that underlies adjustment policies in developing economies (Des). The standard approach has been to use aggregate government expenditure as an instrument of fiscal policy to shock economic activity in a DE, with a negative dynamic response typically observed. In the context of such a small macroeconomic simulation model we decompose government expenditure into consumption and investment expenditure. Simulation exercises with and without model-consistent expectations throw up some contrasting results in the sense that fiscal policy can influence output positively through the effects of public sector investment on private investment in a DE such as India. [F43, E62] Journal: International Economic Journal Pages: 115-139 Issue: 1 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000006 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000006 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:1:p:115-139 Template-Type: ReDIF-Article 1.0 Author-Name: Ulrich Bindseil Author-X-Name-First: Ulrich Author-X-Name-Last: Bindseil Title: A Coalition-Form Analysis Of The “One Country - One Vote” Rule In The Governing Council Of The European Central Bank Abstract: This paper analyses the “one country—one vote” rule for monetary policy decision making of the Governing Council of the European Central Bank in a framework of cooperative game theory. The Shapley value is used as a solution concept. In contrast to former papers analysing the allocation of abstract "voting power" in committees of international organisations, preferences for monetary policy are modelled to obtain a prediction about potential transfers implied by an equal allocation of voting rights when countries are of different size. It is shown that if the number of countries participating to a currency union grows and the weight of the largest country within the currency union becomes small, the allocation of voting rights becomes irrelevant in the sense that transfers per country tend in any case to zero. [C71, E5, F02] Journal: International Economic Journal Pages: 145-164 Issue: 1 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000007 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000007 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:1:p:145-164 Template-Type: ReDIF-Article 1.0 Author-Name: Kit Pong Wong Author-X-Name-First: Kit Pong Author-X-Name-Last: Wong Title: Currency Hedging For Export-Flexible Firms Abstract: This paper examines the production and hedging decisions of a competitive exporting firm under exchange rate uncertainty. The firm possesses export flexibility in that it can distribute its output to either the domestic market or a foreign market, after observing the true realization of the exchange rate. It is shown that the separation theorem does not hold under export flexibility, i.e., the firm's optimal output depends on the firm's preference and on the underlying exchange rate uncertainty. Furthermore, the export- flexible firm underhedges its exchange rate risk exposure in a currency forward market where in the forward exchange rate contains a non-positive risk premium. [D21, F31] Journal: International Economic Journal Pages: 165-174 Issue: 1 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000008 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000008 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:1:p:165-174 Template-Type: ReDIF-Article 1.0 Author-Name: Bils Marks Author-X-Name-First: Bils Author-X-Name-Last: Marks Author-Name: Chang Yongsung Author-X-Name-First: Chang Author-X-Name-Last: Yongsung Title: Cyclical Movements in Hours and Effort Under Sticky Wages-super-* Abstract: We examine the response of a sticky-wage economy to various real and nominal shocks. In addition to variations in hours, we allow for an endogenous response in worker effort per hour. Despite wages being predetermined, the labor market clears through the effort margin. We find that the ability of a sticky-wage model to mimic U.S. business cycles is much improved by allowing for reasonable effort movements. The model also provides a ready explanation for the finding that TFP is negatively affected by nominal shocks. [E24] Journal: International Economic Journal Pages: 1-26 Issue: 2 Volume: 15 Year: 2001 Month: 6 X-DOI: 10.1080/10168730100000033 File-URL: http://hdl.handle.net/10.1080/10168730100000033 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:2:p:1-26 Template-Type: ReDIF-Article 1.0 Author-Name: Lee Chulhee Author-X-Name-First: Lee Author-X-Name-Last: Chulhee Title: Changes in Employment and Hours, and Family Income Inequality in the United.States, 1969--1989 Abstract: This paper estimates how much changes in employment and hours worked for family heads and spouses contributed to the rise in the family income inequality between 1969 and 1989. Change in labor market activity of family heads accounts for half of the increase in the income gap between the top and bottom 10th families. The effect of change in work effort on the income inequality is considerably weaker where four-fifths of families in the middle of income distribution are considered. This result is robust to changes in the selection of the population. The rise in the inequality of labor market activity occurred largely within families headed by prime-age men. The rise in the percentage of families headed by female and the decline in employment rate for older family heads are relatively minor factors. [J2, E2, N3] Journal: International Economic Journal Pages: 27-49 Issue: 2 Volume: 15 Year: 2001 Month: 6 X-DOI: 10.1080/10168730100000034 File-URL: http://hdl.handle.net/10.1080/10168730100000034 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:2:p:27-49 Template-Type: ReDIF-Article 1.0 Author-Name: Horowitz Ira Author-X-Name-First: Horowitz Author-X-Name-Last: Ira Title: On Professor Kohn and Expected Utility: Correction and Clarification Abstract: As a result of an oversight and narrow assumption, Kohn and Hollenhorst (1988) Derive an equation that does not hold in general and that leads to some erroneous Inferences when relied upon in Kohn (1999). The purpose of this note is to identify And clarify the problem and its source, and to draw the appropriate inferences. [D80, Q25] Journal: International Economic Journal Pages: 51-56 Issue: 2 Volume: 15 Year: 2001 Month: 6 X-DOI: 10.1080/10168730100000035 File-URL: http://hdl.handle.net/10.1080/10168730100000035 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:2:p:51-56 Template-Type: ReDIF-Article 1.0 Author-Name: Robert E. Kohn Author-X-Name-First: Robert E. Author-X-Name-Last: Kohn Title: On Professor Kohn and Expected Utility: Correction and Clarification-Rejoinder Abstract: Professor Horowitz correctly identifies the limitation of my assuming separable utility functions to derive a marginal condition for efficiency under uncertainty. Correction this limitation, he provides a simple but powerful condition that encompasses the nonseparable as well as the separable case. This condition replaces the dubious Equation (14) derived in Kohn (1999). In a departure from von Neumann-Morgenstern theory, for cases in which the decisions of a risk-averse community are compared with those it would make were it risk-neutral, it is proposed here that the same utility function holds for risk-neutrality as for risk-aversion, but that the stochastic quantities be replaced by their expected value in the former. [Q25] Journal: International Economic Journal Pages: 57-62 Issue: 2 Volume: 15 Year: 2001 Month: 6 X-DOI: 10.1080/10168730100000036 File-URL: http://hdl.handle.net/10.1080/10168730100000036 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:2:p:57-62 Template-Type: ReDIF-Article 1.0 Author-Name: Karras Georgios Author-X-Name-First: Karras Author-X-Name-Last: Georgios Title: Long-Run Economic Growth In Europe: Is It Endogenous Or Neoclassical? Abstract: The growth effects of European economic and monetary intergration and the progress of regional convergence across Europe depend on whether economic in Europe is consistent with a neoclassical or an endogenous growth model. Using annual data from the 1950-1992 period for each of 20 European economies, the paper finds that steady-state real growth rates are generally unaffected by changes in the investment rate, population growth, and government consumption, evidence consistent with neoclassical growth theories. This Strengthens the likelihood of regional (perhaps conditional) convergence, and suggests that the effects of greater monetary and economic unification will be in terms of higher incomes per capita, but not in terms of permanently higher growth rates.[O40,F43] Journal: International Economic Journal Pages: 63-76 Issue: 2 Volume: 15 Year: 2001 Month: 6 X-DOI: 10.1080/10168730100000037 File-URL: http://hdl.handle.net/10.1080/10168730100000037 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:2:p:63-76 Template-Type: ReDIF-Article 1.0 Author-Name: Lee TongHung Author-X-Name-First: Lee Author-X-Name-Last: TongHung Author-Name: Hwang Hoyoung Author-X-Name-First: Hwang Author-X-Name-Last: Hoyoung Title: Money, Interest Rate and Foreign Exchange Rate As Indicator Variables Of Monetary Policy Abstract: Since monetary policy operations affect the ultimate targets such as real income and prices with considerable time lags, this papers attempts to identify the indicator variable of monetary policy in Korea by using autoregression tests, variance docompositions of VAR forecasts and cointegration analyses. The results show that in Korea unlike the U.S., a broad concept of money, interest rate and foreign exchange rate, taken together, could serve as the indicator variables. In particular, M3, But not M2 nor MCT, is significantly related to real income both in the short-run and in the long-run. Such a finding rejects the practice of controlling either M2 or MCT which the Korean monetary authority had exercised before implementing the recent IMF financial-reform program. [E5] Journal: International Economic Journal Pages: 77-98 Issue: 2 Volume: 15 Year: 2001 Month: 6 X-DOI: 10.1080/10168730100000038 File-URL: http://hdl.handle.net/10.1080/10168730100000038 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:2:p:77-98 Template-Type: ReDIF-Article 1.0 Author-Name: Edward Oczkowski Author-X-Name-First: Edward Author-X-Name-Last: Oczkowski Author-Name: Kishor Sharma Author-X-Name-First: Kishor Author-X-Name-Last: Sharma Title: Imperfect Competition, Returns To Scale and Productivity Growth In Australian Manufacturing: A Smooth Transition Approach To Trade Liberalisation Abstract: This Paper examines the relationship between trade liberalization and productivity growth for Australian manufacturing. An imperfect competition, non-CRS, smooth transition empirical framework is employed for analysis. GMM estimates of the logistic smooth transition model imply that trade reform impacts take approximately four years to complete, but do not occur over the same time period for all industries. In response to trade reforms, for most industries a significant improvement in productivity is estimated, these improvements are associated with lower mark-ups and falling scale parameters. A minority of industries however, experienced no change or falling productivity growth in response to reforms, these industries tended to have the highest absolute protection levels. [D24, F12, C52, L60] Journal: International Economic Journal Pages: 99-113 Issue: 2 Volume: 15 Year: 2001 Month: 6 X-DOI: 10.1080/10168730100000039 File-URL: http://hdl.handle.net/10.1080/10168730100000039 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:2:p:99-113 Template-Type: ReDIF-Article 1.0 Author-Name: Roberto A. De Santis Author-X-Name-First: Roberto A. Author-X-Name-Last: De Santis Title: The 1990 Trade Liberalisation Policy of Turkey: An Applied General Equilibrium Assessment Abstract: I use a static multi-sector, multi-labour, multi-household Applied General Equilibrium (AGE) model for Turkey to show that the trade policy implemented by Turkish policy-makers in the 1990s is not trade diverting. Aggregate welfare rises by 0.6% of the consumer income. Most importantly, since agriculture and traditional the rural income), while urban groups are worse off (-0.5% of the urban income). It is also shown that overall income inequality declines by 1.1-1.7%, and that its main source is the inter-income inequality between urban and rural areas, which decreases by 8.9- 14.7%. [D58, F14, F17] Journal: International Economic Journal Pages: 115-132 Issue: 2 Volume: 15 Year: 2001 Month: 6 X-DOI: 10.1080/10168730100000040 File-URL: http://hdl.handle.net/10.1080/10168730100000040 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:2:p:115-132 Template-Type: ReDIF-Article 1.0 Author-Name: Radelet Steven Author-X-Name-First: Radelet Author-X-Name-Last: Steven Author-Name: Sachs Jeffrey Author-X-Name-First: Sachs Author-X-Name-Last: Jeffrey Author-Name: Lee Jong-Wha Author-X-Name-First: Lee Author-X-Name-Last: Jong-Wha Title: The Determinants and Prospects of Economic Growth in Asia Abstract: This paper analyses Asia's growth experience in a broad historical and international context. East Asian countries grew faster than the rest of the world for four key reasons: they had substantial potential for catching up, their geography and structural characteristics were by- and large favorable, demographic changes worked in favor of more rapid growth, and their economic policies and strategy were conducive to sustained growth. Although the financial crisis of 1997 abruptly brought a halt to Asia's period of robust growth, there was little in Asia's fundamental growth strategy that inevitably led to the crisis. The key to the crisis was too much short-term capital flowing into weak and under-supervised financial systems. This suggests that with better financial management and a return to the core policies that resulted in rapid growth, the East Asian economies can again return to sustained growth. [O11, O40, O53] Journal: International Economic Journal Pages: 1-29 Issue: 3 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000041 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000041 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:3:p:1-29 Template-Type: ReDIF-Article 1.0 Author-Name: Doyle Eleanor Author-X-Name-First: Doyle Author-X-Name-Last: Eleanor Title: Export-Output Causality and the Role of Exports in Irish Growth: 1950-1997 Abstract: Sources of Irish growth are examined using a recently developed Granger causality procedure with particular focus on the role of Irish exports. As augmented production function is employed where the inclusion of variables in addition to exports ensures that different impacts on exports and output are controlled for and thus, a more accurate testing of the export-led-growth hypothesis is possible. The most important sources of Irish growth are identified as the terms of trade and demand in industrial countries i.e. external sources. Bi-directional causality is found for exports and output implying a virtuous circle of growth and exports. [F1,F4] Journal: International Economic Journal Pages: 31-54 Issue: 3 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000042 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000042 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:3:p:31-54 Template-Type: ReDIF-Article 1.0 Author-Name: Mansor Ibrhim Author-X-Name-First: Mansor Author-X-Name-Last: Ibrhim Title: Financial Factors and the Empirical Behavior of Money Demand: A Case Study of Malaysia Abstract: The paper analyses the roles of financial factors in the behavior of M1 and M2 demands for Malaysia. The focus is on the possible changes in the elasticities of the M1 and M2 money demands in the environment of financial innovations and on the influence of real stock prices on the holdings of monetary assets. Our results reinforce existing studies that find the presence of the long-run M1 and M2 money demands and structural instability in the dynamic specification of the M1 demand. However, we are able to identify stable error-correction model for the post-1986 M1 demand and for the M2 demand. Our results also indicate the reduction in the Long run income and exchange rate elasticities of the money demands. Meanwhile, the interest rate sensitivity of the demands becomes more inelastic. Lastly, we document the significance of real stock prices in influencing the demand behavior, indicating the dominance of the wealth effect over the substitution effect. [E41, E44] Journal: International Economic Journal Pages: 55-72 Issue: 3 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000043 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000043 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:3:p:55-72 Template-Type: ReDIF-Article 1.0 Author-Name: Chinna Kannapiran Author-X-Name-First: Chinna Author-X-Name-Last: Kannapiran Title: Stability of Money Demand and Monetary Policy in Papua New Guinea (PNG): An Error Correction Model Analysis Abstract: An error correction model (ECM) is used to study the Properties of money demand and to evaluate the appropriate monetary policy in PNG. The study confirms that the determinats of money demand are real GDP, nominal interest and inflation rate. The income elasticity of money demand is very low. The demand for money in PNG was stable during 1979-95, suggesting that the monetary targeting regime by the PNG Central Bank is feasible. However, as PNG proceeds with economic reforms that Includes financial sector reform and a floating exchange rate regime, the stability of the demand for money may have to be re-examined periodically. The best approach for conducting the monetary policy in PNG is to target the inflation rate. [E41, E52, C22] Journal: International Economic Journal Pages: 73-84 Issue: 3 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000044 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000044 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:3:p:73-84 Template-Type: ReDIF-Article 1.0 Author-Name: Kim Kyung-Soo Author-X-Name-First: Kim Author-X-Name-Last: Kyung-Soo Author-Name: Lee Jaewoo Author-X-Name-First: Lee Author-X-Name-Last: Jaewoo Title: Asset Price And Current Account Dynamics Abstract: We examine the interaction between asset market and current account in a small open economy. In an overlapping generations economy in which land and money are available assets, the interaction between the land price and current account dynamics is shown to generate a plausible (asset price) specie-flow mechanism. We apply them to a number of issues. Domestic credit policy is neutral in the long run: one unit of foreign reserve increase offsets one unit of credit reduction. Next, the association between the endowment of land and foreign asset accumulation depends on parameters of the model. Finally, we examine the dynamic adjustment s following a once-and-for-all capital inflow. When the adjustment involves running current account deficit, the recipient country's foreign reserve position is permanently lowered. Furthermore, the steady state level of national wealth is permanently reduced. [E4, F3] Journal: International Economic Journal Pages: 85-108 Issue: 3 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000045 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000045 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:3:p:85-108 Template-Type: ReDIF-Article 1.0 Author-Name: Georgios Kouretas Author-X-Name-First: Georgios Author-X-Name-Last: Kouretas Author-Name: Leonidas Zarangas Author-X-Name-First: Leonidas Author-X-Name-Last: Zarangas Title: Long-Run Purchasing Power Parity and Structural Change: The Official and Parallel Foreign Exchange Markets For Dollars In Greece Abstract: This paper examines the Purchasing Power Parity theory from a long-run perspective in the presence of a parallel or 'black' market for US dollars in Greece using monthly data for the recent float. Johansen's FIML multivariate cointegration techniques is applied. Recent development associated with this procedure are considered. First, a formal test developed by Paruolo (1996) for the presence of I(2) and I(1) components in a ultivariate context is applied along with the estimation of the roots of the companion matrix for the correct determination of the cointegration rank. Second, given that two significant cointegration vectors were found, structural restrictions identifying the long-run relations of interest are specified as proposed by Johansen and Juselius (1994) and Johansen (1995b). Thus, the joint structure of PPP and long-run informational market efficiency could not be rejected. Furthermore, estimation of the error correction terms shows that the black market rate adjusts to eliminate any deviation from long-run PPP. Finally, stability tests proposed by Hansen and Johansen (1993) are applied and it is shown that the dimension of the cointegration space is simple dependent while the estimated coefficients do not exhibit instability in recursive estimations. [F31 F33] Journal: International Economic Journal Pages: 109-128 Issue: 3 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000046 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000046 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:3:p:109-128 Template-Type: ReDIF-Article 1.0 Author-Name: Oscar Bajo-Rubio Author-X-Name-First: Oscar Author-X-Name-Last: Bajo-Rubio Author-Name: Sosvilla-Rivero Simon Author-X-Name-First: Sosvilla-Rivero Author-X-Name-Last: Simon Title: A Quantitative Analysis of the Effects of Capital Controls: Spain, 1986-1990 Abstract: This Paper offers a quantitative assessment of the effectiveness of capital controls in Spain during the period 1986-1990. The analysis is based on a portfolio-balance model Previously estimated for the Spanish economy, where the complete elimination of capital controls is simulated. Our results suggest that capital controls would have avoided a net capital outflow amounting to nearly a 4 per cent increase in the Spanish net foreign asset position, as a quarterly average, during the first five years of Spanish membership into the EU. [C32, F21, F36] Journal: International Economic Journal Pages: 129-146 Issue: 3 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000047 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000047 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:3:p:129-146 Template-Type: ReDIF-Article 1.0 Author-Name: Bin Xu Author-X-Name-First: Bin Author-X-Name-Last: Xu Title: Entrepreneurial Selection, Financial Markets, and Patterns of International Trade Abstract: This paper introduces entrepreneurial selection and imperfect financial markets to the 2x2x2 model of international trade. Entrepreneurs are heterogeneous in ability and borrow from banks who do not observe their ability. The pattern of international trade depends on (1) factor abundance, (2) endogenously determined productivity, and (3) endogenously determined financial market imperfections. We show that entrepreneurial selection results in a diminished Rybczynski effect and financial market imperfections further reduce the effect; hence differences in capital abundance imply a smaller trade volume than predicted by the Heckscher-Ohlin theorem. The results help to resolve a conflict between the Heckscher-Ohlin model and data. [F11] Journal: International Economic Journal Pages: 147-167 Issue: 3 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000048 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000048 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:3:p:147-167 Template-Type: ReDIF-Article 1.0 Author-Name: W. Jansen Dennis Author-X-Name-First: W. Jansen Author-X-Name-Last: Dennis Title: Limited Downside Risk In Portfolio Selection Among U.S. and Pacific Basin Equities Abstract: In this paper we domostrate safety first portfolio selection using extreme value theory.We show that Roy's safety first criterion can be improved on by exploiting the fat tail property of asset returns. Using daily data for a set of international stock indices for the period 1986-May 2000, we calculate the so-called tail indexes, which are accurate measures of the fat-tailedness of the stock return distributions, and use these to calculate minimum threshold return levels given very low exceedence probabilities for investors. This example is but one way that the theory of extremes can be utilized in economics and finance. [G11] Journal: International Economic Journal Pages: 1-39 Issue: 4 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000049 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000049 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:4:p:1-39 Template-Type: ReDIF-Article 1.0 Author-Name: Kevin Denny Author-X-Name-First: Kevin Author-X-Name-Last: Denny Title: Asymmetric Central Bank Reaction Function: An Application of Smooth Transition Regression Abstract: This paper estimates a simple model of exchange rate policy where the Central Bank optimises an objective function which takes into account competitiveness, its commitment to the EMU and the cost of adjustment. We allow for asymmetry in government behaviour whereby a key parameter, the marginal adjustment cost of the effective exchange rate, takes on a continuum of values depending on the value of the DeustscheMark/Irish pound exchange rate. It is shown that he adjustment cost parameter is decreasing in either the level of or the rate change of the DM rate suggesting that the authorities display greater aversion to exchange rate fluctuations as the domestic currency weakens. [C22, F31, F41] Journal: International Economic Journal Pages: 23-32 Issue: 4 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000050 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000050 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:4:p:23-32 Template-Type: ReDIF-Article 1.0 Author-Name: E. C. Mamatzakis Author-X-Name-First: E. C. Author-X-Name-Last: Mamatzakis Title: Public Spending and Private Investment: Evidence From Greece Abstract: The aim of this paper is to investigate whether there is a link between disaggregated measures of government expenditures and private investment in Greece. A cointegration analysis of a multivariate system of equations is applied in order to empirically estimate the long run relationships between private investment and different measure of government expenditures. Subsequently IRF and VDC are estimated. Government investment is found to assert a positive effect on private investment, supporting in this way the capital accumulation process. On the other hand, government consumption appears to compete for the same resources with government investment, while it negatively affects private investment. [E62] Journal: International Economic Journal Pages: 33-46 Issue: 4 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000051 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000051 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:4:p:33-46 Template-Type: ReDIF-Article 1.0 Author-Name: In Kwon Lee Author-X-Name-First: In Kwon Author-X-Name-Last: Lee Title: Asymmetry in the Response of Price-Cost Margins to the Level of Demand Across Booms and Slumps: the Case of U.S. Industries* I thank Editor of this journal and an anonymous referee for their helpful suggestions and Abstract: Haltiwanger and Harrington (1991) reveal that, while the gain from deviating from a collusive agreement in an oligopolistic industry is greatest during booms, it is most difficult to collude during recessions since forgone profits inflicted on defection are relatively low in recessions. Their numerical simulations show that firms price more countercyclically during recessions than during booms to deter relatively greater incentive to defect in recession. This paper tests for a potential asymmetry in the response of margins to the level of demand across booms and slumps, using panel data covering 180 U.S. four-digit level SIC manufacturing industries over the 1963-1987 period. The principal findings accept this theoretical prediction. [L1, L6] Journal: International Economic Journal Pages: 47-58 Issue: 4 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000052 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000052 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:4:p:47-58 Template-Type: ReDIF-Article 1.0 Author-Name: Choi Jay Pil Author-X-Name-First: Choi Jay Author-X-Name-Last: Pil Title: Planned Obsolescence As A Signal of Quality Abstract: This paper provides a new rationale for planned obsolescence based on imperfect information about the quality of durable goods. The source of the inefficient choice of durability lies in the fact that the frequency of repeat purchases and the future expected profit that can monitor the quality of the good is inversely related to the durability of the good. Since the repeat purchases are valued more for the high quality producer, the returns to reduced durability is also greater for the high quality producer. This asymmetry in the returns to reduced durabhilit y implies that planned obsolescence can be used as a signal of quality. With leasing, however, the durability choice incentive often runs in the other direction, and the monopolist tends to choose excessively long lives for his product. This is in sharp contrast to the durability literature where leasing restores the incentive for the efficient choice of durability. [L1, D8] Journal: International Economic Journal Pages: 59-79 Issue: 4 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000053 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000053 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:4:p:59-79 Template-Type: ReDIF-Article 1.0 Author-Name: Nikiforos Laopodis Author-X-Name-First: Nikiforos Author-X-Name-Last: Laopodis Title: Time-Varying Behavior and Asymmetry in EMS Exchange Rates Abstract: This paper explores the time-varying behavior of five EMS exchange rates namely, the Belgian Franc, Dutch Guilder, French Franc, Italian Lira and the Spanish Peseta vis-a-vis the Deutschemark from 1979 to 1998. The returns were examined using the Sign- and Volatility-Switching GARCH model, which is capable of accounting for potential asymmetries and the reversals in a series' volatility structure. The results point to significant sensitivities of the conditional variances of the French franc, the lira and the peseta to adverse shocks but notable responsiveness to favorable shocks by those of the other rates. Although asymmetry in the volatility structure of all rates is found in the period prior to Germany's reunification in 1990, it vanishes thereafter. Volatility persistence for all rates is noticeable in the first period but becomes more pronounced in the second, [F23, F31] Journal: International Economic Journal Pages: 81-94 Issue: 4 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000054 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000054 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:4:p:81-94 Template-Type: ReDIF-Article 1.0 Author-Name: Benjamin Nancy Author-X-Name-First: Benjamin Author-X-Name-Last: Nancy Author-Name: Michael Ferrantino Author-X-Name-First: Michael Author-X-Name-Last: Ferrantino Title: Trade Policy and Productivity Growth in OECD Manufacturing Abstract: Trade liberalization may promote economic growth in a number of ways, including by accelerating the rate of technological change. Firms that face more intense import competition may be spurred to greater rates of innovation; firms which export may absorb new technologies through their contact with international markets. This paper examines evidence on trade policy and productivity growth for a sample of thirteen OECD countries and including eighteen manufacturing sectors, using data primarily from the 1980s. Within individual sectors, there are strong productivity convergence effects within the OECD. After controlling for convergence, we find a positive association between high rates of productivity growth and low tariffs, and between high productivity growth and strong export performance. We found no particular association between high productivity growth and import penetration. The results are consistent with the possibility of positive linkages between trade liberalization and accelerated productivity growth. [F1, O4] Journal: International Economic Journal Pages: 95-115 Issue: 4 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000055 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000055 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:4:p:95-115 Template-Type: ReDIF-Article 1.0 Author-Name: Chung Hyun-Sik Author-X-Name-First: Chung Author-X-Name-Last: Hyun-Sik Author-Name: Rhee Hae-Chun Author-X-Name-First: Rhee Author-X-Name-Last: Hae-Chun Title: Carbon Dioxide Emissions of Korea and Japan and Its Transmission Via International Trade Abstract: We estimated total CO2 emissions of Japan and South Korea for 1990 using the familiar input-output model. The differences in CO2 emission between two countries are decomposed into their components, and effects of international trade on domestic CO2 emissions are analyzed for both countries. We show that, even though the absolute level of emission is much lower in South Korea than in Japan, total emission intensities are generally higher in the former. Korean exports to Japan are more emission intensive than the reverse, while exports of both countries to the rest of the world are more emission intensive than their bilateral trade. [F14] Journal: International Economic Journal Pages: 117-136 Issue: 4 Volume: 15 Year: 2001 X-DOI: 10.1080/10168730100000056 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730100000056 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:15:y:2001:i:4:p:117-136 Template-Type: ReDIF-Article 1.0 Author-Name: Johnson Simon Author-X-Name-First: Johnson Author-X-Name-Last: Simon Title: Coase and the Reform of Securities Markets Abstract: A growing body of evidence indicates that legal rules matter for corporate Governance around the world. Countries with stronger investor protection have more Developed capital markets, and find it easier to finance economic development. Weak Corporate governance also appears to make companies and countries vulnerable to large collapses. The origin of the institutions lies with the history of competing political Systems within Europe and colonization outside of Europe. Despite the importance of long-standing historical influences, Effective legal reform has proved possible in some Cases. The most successful reforms to date are those that implement US standards of Disclosure. [G30, G38, K22, P10] Journal: International Economic Journal Pages: 1-19 Issue: 1 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000001 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000001 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:1:p:1-19 Template-Type: ReDIF-Article 1.0 Author-Name: Magda Kandil Author-X-Name-First: Magda Author-X-Name-Last: Kandil Title: Asymmetry In Economic Fluctuations In The Us Economy: The Pre-War And The 1946-1991 Periods Compared Abstract: The focus of this investigation is one the asymmetric effects of monetary growth Shocks in the pre-and periods of United States history. The downward Rigidity of nominal wages in the post -war period appears to be an important factor in Differentiating the slope of the aggregate supply curve over time. Accordingly, the Response of real output and price to expansionary monetary growth shocks is similar in The pre-and post-war periods. In contrast, the aggregate supply curve is flatter in the Face of negative monetary growth shocks in the post-war period, exacerbating output Contraction and moderating price deflaction. The apparent change in the asymmetric Effects of m onetary growth shocks deflation. The apparent change in the asymmetric States over time. [E30,E33,E34,E35] Journal: International Economic Journal Pages: 21-42 Issue: 1 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000002 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000002 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:1:p:21-42 Template-Type: ReDIF-Article 1.0 Author-Name: Dasgupta Siddhartha Author-X-Name-First: Dasgupta Author-X-Name-Last: Siddhartha Author-Name: Devadoss Stephen Author-X-Name-First: Devadoss Author-X-Name-Last: Stephen Title: Equilibrium Contracts In a Bilateral Monopoly with Unequal Bargaining Powers Abstract: Real-world bilateral monopolies often indicate that one party exercises slightly Superior bargaining power than the other party. We analyze long-term, cooperative Contracts in bilateral monopolies with unequal bargaining powers. We assume that the Two parties bargain for a determinate price and quantity of the intermediate product by Optimizing a joint objective which takes into account the profits and bargaining power of Each party. We use a Bowley price leadership model to develop the multi-period Contracts and derive conditions that induce a Nash equilibrium at the jointly determined Points of operation. [C71,C78] Journal: International Economic Journal Pages: 43-71 Issue: 1 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000003 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000003 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:1:p:43-71 Template-Type: ReDIF-Article 1.0 Author-Name: Choudhry Taufiq Author-X-Name-First: Choudhry Author-X-Name-Last: Taufiq Title: Financial Innovations And Demand For United States M1 And M2 Components Abstract: This paper investigates the effects OF THE Depository Institution Deregulation and Monetary Control Act of 1980 on the demand function of the United States M1, M2 and their components. The empirical tests are conducted using monthly data from January 1959 to June 1997 and the Johansen cointegration procedure. Results show that the stated monetary act of 1980 considerably affected the income and interest rate demand elasticities of both M1, M2 and their components. Results show a fall in the M1 interest rate elasticity indicating M1 as possibly a more effective monetary policy too after 1980. Results fail to show a stationary M2 demand function during the 1980s and 1990s after the 1980 monetary act. The rate of adjustment of the monetary variables towards the long-run equilibrium is also affected by the 1980 Act. [E41, E44] Journal: International Economic Journal Pages: 73-93 Issue: 1 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000004 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000004 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:1:p:73-93 Template-Type: ReDIF-Article 1.0 Author-Name: M. Renuka Author-X-Name-First: M. Author-X-Name-Last: Renuka Author-Name: K. P. Kalirajan Author-X-Name-First: K. P. Author-X-Name-Last: Kalirajan Title: How IncomeElastic Is The Consumers Demand For Services In Singapore? Abstract: Although economic theory indicares that services are income elastic, empirical Evidence on this issue has not been conclusive. Using time series dat from 1965 to 1996 this paper ettempts to test whether consumer's demand for services is income elastic in Singapore. Unlike in other studies,the stationary of the macro economic variables used in this analysis is tested to obtain more reliable estimates. The empirical results show that demand for services is not income elastic in Singapore. [C12, C22] Journal: International Economic Journal Pages: 95-104 Issue: 1 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000005 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000005 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:1:p:95-104 Template-Type: ReDIF-Article 1.0 Author-Name: Beum-Jo Park Author-X-Name-First: Beum-Jo Author-X-Name-Last: Park Title: Asymmetric Volatility of Exchange Rate Returns Under The EMS: Some Evidence From Quantile Regression Approach for Tgarch Models Abstract: This paper investigates the systematic impact of the European Monetary System EMS) on asymmetry in volatility of exchange rates vis-a-vis the Deutsche Mark. It seems plausible that the symmetric fluctuation band in the EMS affects asymmetric volatility and this id dominant at extreme returns. To examine the plausibility, this paper proposes quantile regression for threshold GARCH models (QRTGARCH), which allows an asymmetric reaction of conditional volatility to shocks without any rigid distributional assumptions. Further, it is well suited to precisely capture the asymmetric behaviors of conditional volatility over different levels of returns. The empirical finding suggests that the EMS seems to have some systematic effect on the asymmetry in volatility at moderate level of unpredictable returns. Especially, the estimation results of the QRTGARCH show that after the EMS conditional volatility for most of EMS currencies tends to grow more significantly in reaction to positive shock than negative shock at 0.1 quantile of returns distribution, so that as the unpredictable returns go down, the systematic effect of the EMS on asymmetry in volatility becomes more significant. Impressive as these results may be, the systematic effect can vary with levels of unpredictable returns. [F31, C22, or C51] Journal: International Economic Journal Pages: 105-125 Issue: 1 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000006 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000006 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:1:p:105-125 Template-Type: ReDIF-Article 1.0 Author-Name: Tang Linghui Author-X-Name-First: Tang Author-X-Name-Last: Linghui Title: Incomplete contracts And Vertically Integrated Multinational Enterprises Abstract: This paper conducts an empirical analysis of intra-firm trade for vertically integrated multinational enterprises (VMNEs). Within the context of incomplete contracts, the study attempts to explain cross-industry variations in the relative importance of intra firm trade. Using data for U.S. based multinationals from 1989 to 1996, it is found that the shares of U.S. intra-firm exports and imports are positively related to the non contractible a activities of U.S. intra-firm while they are negatively related to the non contractible activities of foreign affiliates. [F23, f10, L22] Journal: International Economic Journal Pages: 127-138 Issue: 1 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000007 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000007 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:1:p:127-138 Template-Type: ReDIF-Article 1.0 Author-Name: Malley Jim Author-X-Name-First: Malley Author-X-Name-Last: Jim Author-Name: Molana Hassan Author-X-Name-First: Molana Author-X-Name-Last: Hassan Title: Fiscal Policy And The Composition Of Private Consumption: Some Evidence From The U.A. And Canada Abstract: This paper develops a generalized version of the life-cycle model in which consumers' preferences are defined over components of consumption and are affected by the level of public expenditure on goods and services. The model implies that the crowding out of private consumption could in fact be a direct demand side phenomenon caused by the way preferences respond to a change in public spending. Evidence from U.S. and Canadian data for the period 1935-1995 confirms this theoretical conjecture as well as implying that in both countries demand for durable goods is likely to show relatively large swings which may undermine the stability of the sector and harm the supply side. [E22. E62]. Journal: International Economic Journal Pages: 139-158 Issue: 1 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000008 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000008 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:1:p:139-158 Template-Type: ReDIF-Article 1.0 Author-Name: Adrian Pagan Author-X-Name-First: Adrian Author-X-Name-Last: Pagan Title: Learning About Models and Their Fit to Data Abstract: The paper asks what is the most informative way of assessing the fit of a model to data. often an answer comes from the context. In particular, from a consideration of how the model is to be used. Such information often leads one to seek transformations of the data that deliver the requisite information. Even in those instances in which we are sure of the best way of looking at fit, e.g. by the mean of the sample scores of an alternative model, it is often useful to augment the information provided by these tests through a decomposition of them. In time series such decolpositions have often involved recursive analyses. In this paper we propose that he moments underlying tests be re-written as an integrated conditional moment, where the conditioning variable is chosen to elicit useful information. The idea is potentially useful in assessing non-linear models. To implement the approach non-parametric methods generally need to be applied to simulated data in order to perform the decomposition. A range of applications of the idea, drawn from published articles, is used to illustrate the advantages of the method. [C10] Journal: International Economic Journal Pages: 1-18 Issue: 2 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000009 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000009 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:2:p:1-18 Template-Type: ReDIF-Article 1.0 Author-Name: Ali Darrat Author-X-Name-First: Ali Author-X-Name-Last: Darrat Title: On Budget Deficits And Interest Rates: Another Look At The Evidence Abstract: This paper revisits the relationship between government budget deficits and interest rates in Greece. Contrary to the results of Vamvoukas (1997), the evidence I deduce from system estimations of error-correction models consistently denies any causal impact of the deficits on interest rates. Indeed, the high correlation observed between the two variables appears to the outcome of interest rates causing purposeful changes in the stance of fiscal policy. These findings stand up to numerous sensitivity tests and provide further support to the overwhelming evidence against the crowding-out hypothesis, [E6, H6] Journal: International Economic Journal Pages: 19-29 Issue: 2 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000010 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000010 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:2:p:19-29 Template-Type: ReDIF-Article 1.0 Author-Name: George Vamvoukas Author-X-Name-First: George Author-X-Name-Last: Vamvoukas Title: Budget Deficits and Interest Rates in a Small Open Abstract: Additional empirical research on the links between budget deficits and interest rates Is highly relevant for the ongoing discussion about the validity of the Keynesian Proposition and the Ricardian equivalence. This study using data from a small open Economy investigates the empirical framework of both paradigms by applying SURE Technique and impulse response functions. SURE results lead to the indication that a bidirectional pattern of causality might exist between budget deficits and interest rates. Impulse response functions show that deficits and interest rates follow a joint feedback Causality. This result is consistent with the Keynesian proposition, because changes in Interest rates are a response to positive movements in budget deficits. [E43, H62] Journal: International Economic Journal Pages: 31-36 Issue: 2 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000011 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000011 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:2:p:31-36 Template-Type: ReDIF-Article 1.0 Author-Name: Abeysinghe Tilak Author-X-Name-First: Abeysinghe Author-X-Name-Last: Tilak Author-Name: Choy Keen Author-X-Name-First: Choy Author-X-Name-Last: Keen Title: On the Use of Innovation Correlations to Study Cyclical Co-Movements in GDP and Its Components Abstract: Innovation cross correlations are sometimes used as indicators of cyclical co-movements among economic variables. This note shows that care is needed in making inferences about business cycle co-movements between GDP and its components from an innovation cross correlation analysis because of the effect of the national income accounting identity. The point is illustrated with an empirical example from Singapore. [C22, E32] Journal: International Economic Journal Pages: 37-45 Issue: 2 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000012 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000012 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:2:p:37-45 Template-Type: ReDIF-Article 1.0 Author-Name: Shan Jordan Author-X-Name-First: Shan Author-X-Name-Last: Jordan Title: A Macroeconometric Model of Income Disparity in China Abstract: This Paper examines what impacts, if any, macroeconomic performances and macroeconomic policy have and on income inequality in China during the period 1995-1998. A vector autoregression mode (VAR) is estimated which includes measures of macroeconomic performance, such as inflation and unemployment, and of macroeconomic policy such as money supply and fiscal expenditure. The VAR techniques, “innovation accounting” and “Granger causality,” are utilized to examine the causal linkage, if any, between “macro-factors” and income disparity in China. We find that fiscal spending and unemployment appear to be the most important sources of change income dispersion as far as the “macro” factors are concerned. [C32, D31,011 and 053] Journal: International Economic Journal Pages: 47-63 Issue: 2 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000013 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000013 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:2:p:47-63 Template-Type: ReDIF-Article 1.0 Author-Name: Benarroch Michael Author-X-Name-First: Benarroch Author-X-Name-Last: Michael Author-Name: James Gaisford Author-X-Name-First: James Author-X-Name-Last: Gaisford Title: Learning, experience and the dynamics of north-south Trade and technology transfer Abstract: This paper examines the dynamics of learning and experience that underlie technology transfer using a North-South trade model with a continuum of goods. Since North is historically more experienced than South, it initially produces the most advanced goods and pays higher wages. Whenever there is a market-driven transfer of technology and production over time, there will be some wage convergence as South gradually gains experience. Nevertheless, wage inequality must persist in the steady state. Product innovation typically increases steady-state wage inequality because new goods are produced in North, and North ultimately learns than South. [F12, O19] Journal: International Economic Journal Pages: 65-83 Issue: 2 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000014 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000014 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:2:p:65-83 Template-Type: ReDIF-Article 1.0 Author-Name: Bahmani-Oskooee Mohsen Author-X-Name-First: Bahmani-Oskooee Author-X-Name-Last: Mohsen Author-Name: Shin Sungwon Author-X-Name-First: Shin Author-X-Name-Last: Sungwon Title: Stability of the Demand for Money in Korea Abstract: Cointegration technique is now a common method of estimating an money demand function. Couple studies that applied this technique to money demand in korea, interpreted their finding of cointegration as a sign of stable money demand. In this paper we show that even though M2 monetary aggregate is cointegrated with income, interest rate and exchange rate, application of CUSUM and CUSUMSQ tests to the residuals of an error-correction model reveal that it is unstable. [E41] Journal: International Economic Journal Pages: 85-95 Issue: 2 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000015 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000015 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:2:p:85-95 Template-Type: ReDIF-Article 1.0 Author-Name: Mansoorian Arman Author-X-Name-First: Mansoorian Author-X-Name-Last: Arman Author-Name: Neaime Simon Author-X-Name-First: Neaime Author-X-Name-Last: Simon Title: Habits And Durability In Consumption And The Effects Of Exchange Rate Policies Abstract: The effects of exchange rate policies are worked out in a model in which consumption goods are durable, and money enters the utility function. The interaction of habits and durability results in a non-monotonic adjustment of consumption expenditures, and the current account. As money does not exhibit durability, its dynamics are montonic, and determined mainly by habits effects. Hence, an increase in the rate of depreciation of the domestic currency will very likely lead to a nomonotonic adjustment of consumption and the current account, while the adjustment of real money holdings will be monotonic [F31, F32, F41] Journal: International Economic Journal Pages: 97-114 Issue: 2 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000016 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000016 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:2:p:97-114 Template-Type: ReDIF-Article 1.0 Author-Name: Hahm Sang-Moon Author-X-Name-First: Hahm Author-X-Name-Last: Sang-Moon Title: Monetary Bands And Monetary Neutrality Abstract: This paper attempts to provide an explanation of the short-run monetary non-neutrality in an economy where agents have full current information and no nominal prices are set in advance. This non-neutrality arises due to the government's setting of nominal target bands. If the current money supply is near the upper bound of the band, any increase in money supply will require the monetary authority to take immediate action to reduce it. This serves to decrease the expected rate of inflation, thus increasing the demand for real balances and production. This paper also shows that if readjustments of nominal target bands are likely to occur, then the positive effect of money on output becomes attenuated. [E32, E52] Journal: International Economic Journal Pages: 115-128 Issue: 2 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000017 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000017 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:2:p:115-128 Template-Type: ReDIF-Article 1.0 Author-Name: Shimono Keiko Author-X-Name-First: Shimono Author-X-Name-Last: Keiko Author-Name: Ishikawa Miho Author-X-Name-First: Ishikawa Author-X-Name-Last: Miho Title: Estimating the Size of Bequests in Japan: 1986-1994 Abstract: In this paper, we present a simple method for estimating the amount and the size of bequests, which is applicable to other countries as well, because it needs only four different kinds of published aggregate data. We estimate the amount of bequests in Japan for 1986, 1988, 1989, 1990, 1992 and 1994 - the period of the Japanese bubble economy and the subsequent recession. Bequests, however, have continued to increase with ageing population from 40 to 60 per cent of net household assets and 30 to 40 per cent of national wealth even in the current recession. Our study confirms the Importance of bequest, even although only one in four Japanese has an intended bequest motive. [D39, E21, H31] Journal: International Economic Journal Pages: 1-21 Issue: 3 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000018 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000018 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:3:p:1-21 Template-Type: ReDIF-Article 1.0 Author-Name: Jalal Siddiki Author-X-Name-First: Jalal Author-X-Name-Last: Siddiki Title: Trade and Financial Liberalisation and Endogenous Growth in Bangladesh Abstract: This paper empirically explores the joint impact of financial and trade liberalisation on economic growth in Bangladesh using various time series techniques, endogenous growth theory and annual data from 1975-95. Our empirical results are in accordance with the predictions of endogenous growth theory that both financial and trade liberalisation, along with investment in human capital enhance economic growth, suggesting the case for liberalisation of both the financial and trade sectors and suggesting that government initiatives in education policy may expedite economic growth. Results are robust across methodologies. [E52, F43, O11, O53] Journal: International Economic Journal Pages: 23-37 Issue: 3 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000019 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000019 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:3:p:23-37 Template-Type: ReDIF-Article 1.0 Author-Name: Sangdai Ryoo Author-X-Name-First: Sangdai Author-X-Name-Last: Ryoo Title: Testing for Sunspot in the Foreign Exchange Market Abstract: It has been shown that the nonfundamental uncertainty called sunspots matters in many areas of the economy. Noting the fact that nationwide capital movement and the speculative demand for foreign currencies are rapidly increasing, this paper conducts empirical tests on the sunspot exchange rate model. The empirical result shows that the sunspot equilibrium exchange rate deviating from Purchasing Power Parity (PPP) and Interest Rate Parity (IRP) is consistent with the real data. More importantly, the Generalized Method of Moments (GMM) over-identification test is shown to support the evidence that more general Euler equations are in favor of our sunspot equilibrium exchange rate model. [C52, E44] Journal: International Economic Journal Pages: 39-58 Issue: 3 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000020 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000020 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:3:p:39-58 Template-Type: ReDIF-Article 1.0 Author-Name: Roberto De Santis Author-X-Name-First: Roberto Author-X-Name-Last: De Santis Title: Indra-Industry Trade, Endogenous Technical Change, Wage Inequality and Welfare Abstract: By using alternative intra-industry trade models (1. New goods cannot be introduced into the economy; 2. The possibility for a set of capital goods available in the economy to vary; the models consider the existence of intersectoral linkages), I show by means of Applied General Equilibrium (AGE) analysis that trade rises wage inequality between skilled and unskilled workers; but the impact on wage inequality is far larger, when countries are assumed to exchange differentiated capital goods. The latter result has been obtained by using an imperfect competitive model, which embodies a sector bias technological change that arises from trade. In addition, the gains from trade, insignificant under the standard trade hypotheses, are extraordinarily large when endogenous technological change is taken into account. The main policy conclusion is that if policy makers of flexible wage economies introduce trade barriers to reduce wage inequality, these protective measures, by affecting the diffusion of technology, would cause a large welfare loss. [D58, f12, F43, J3, O3] Journal: International Economic Journal Pages: 59-78 Issue: 3 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000021 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000021 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:3:p:59-78 Template-Type: ReDIF-Article 1.0 Author-Name: Wong Kit Pong Author-X-Name-First: Wong Kit Author-X-Name-Last: Pong Title: Export-Flexible Firms and Forward Markets Abstract: This paper examines the production and hedging decisions of an exporting firm under exchange rate uncertainty. The firm is export flexible in that it can distribute its output to either the domestic market or a foreign market, after observing the realized spot exchange rate. The firm is a monopoly in the domestic market but a price-taker in the foreign market. It is shown that the separation theorem holds if selling exclusively in the domestic market is suboptimal even under the most unfavorable sport exchange rate. Otherwise, the firm's optimal output depends on its preference and on the underlying exchange rate uncertainty. Furthermore, the export-flexible firm underhedges its exchange rate risk exposure in a currency forward market wherein the forward exchange rate contains a non-positive risk premium. [D21, F31] Journal: International Economic Journal Pages: 81-95 Issue: 3 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000022 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000022 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:3:p:81-95 Template-Type: ReDIF-Article 1.0 Author-Name: Kim Chong-Sup Author-X-Name-First: Kim Author-X-Name-Last: Chong-Sup Title: A Trade Model of Intermediate Products With Transportation Cost Abstract: This paper presents a trade model of intermediate products where a country has the same production technology as the outside world, and the source of trade is the unbalance in the factor endowment. The decision as to how much to process the raw material before exporting depends on the capital requirements for the processing, and the change in transportation cost due to the processing. The lower the requirements of capital coupled with a more rapid fall in the transportation cost in the earlier stage of production, the more probable that the country will export the processed intermediate good instead of the raw material. Journal: International Economic Journal Pages: 97-113 Issue: 3 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000023 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000023 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:3:p:97-113 Template-Type: ReDIF-Article 1.0 Author-Name: Aditya Bhattacharjea Author-X-Name-First: Aditya Author-X-Name-Last: Bhattacharjea Title: Infant Industry Protection Revisited Abstract: In 1791, Alexander Hamilton suggested that assuring protection to domestic entrants Could pre-empt entry-degterrence by foreign firms. This paper reformulates his Argument in game-theoretic terms with asymmetric cost information, imposing the Requirement that both the foreign firm's threat and the home governments's promise of Protection should be credible. It derives a simple optimal tariff formula that depends Only on the expectation of foreign costs. It then shows that this tariff can lead to Welfare-decreasing entry, but only if thee foreign is relatively inefficient. However, If the formula is applied with dynamic consistency, and is rationally anticipated by both foreign and domestic firms, it prevents foreign entry-deterrence and improves deomestic welfare. [F13, 019] Journal: International Economic Journal Pages: 115-133 Issue: 3 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000024 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000024 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:3:p:115-133 Template-Type: ReDIF-Article 1.0 Author-Name: Apergis Nicholas Author-X-Name-First: Apergis Author-X-Name-Last: Nicholas Author-Name: Eleftheriou Sophia Author-X-Name-First: Eleftheriou Author-X-Name-Last: Sophia Title: Measuring Exchange Market Pressure and the Degree of Exchange Market Intervention for the Greek Drachma Abstract: This paper presents exchange market pressure and intervention indices than can be applied as tools for policy analysis in the case of Greece. A small open economy model is presented that helps to assess Greek exchange rate policy, within a framework characterized for a strong preference to eliminate excessive exchange rate volatility to meet the Maastricht criteria of low inflation and a fixed domestic currency. [F31] Journal: International Economic Journal Pages: 135-145 Issue: 3 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000025 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000025 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:3:p:135-145 Template-Type: ReDIF-Article 1.0 Author-Name: Yuen Chi-Wa Author-X-Name-First: Yuen Author-X-Name-Last: Chi-Wa Title: Openness And The Output-Inflation Tradeoff: Floating Vs. Fixed Exchange Rates Abstract: The paper is an attempt to understand how globalization (in the form of opening up an otherwise closed economy to commodity trade and foreign investment) would interact with the exchange rate regime chosen by a small open economy to determine its output-inflation tradeoff. Based on the stochastic dynamic Mundell-Fleming model, our theory suggests that, under “normal” circumstances, the Phillips curve would be flatter under a fixed exchange rate regime. We also provide some empirical support based on Hong Kong data. [E2; F3] Journal: International Economic Journal Pages: 1-26 Issue: 4 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000026 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000026 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:4:p:1-26 Template-Type: ReDIF-Article 1.0 Author-Name: M. Frenkel Author-X-Name-First: M. Author-X-Name-Last: Frenkel Author-Name: G. Shimidt Author-X-Name-First: G. Author-X-Name-Last: Shimidt Author-Name: G. Stadtmann Author-X-Name-First: G. Author-X-Name-Last: Stadtmann Author-Name: Nickle Christiane Author-X-Name-First: Nickle Author-X-Name-Last: Christiane Title: The Effects of Capital Controls on Exchange Rate Volatility and Output Abstract: This paper extends the Dornbusch model of overshooting exchange rates to discuss both exchange rate and output effects of capital controls that involve additional costs for International asset transactions.We show that, on the one hand, such capital controls have the merit of reducing the volatility of exchange rate volatility in the sort run and induces costs for the real sector in the form of lower equilibrium output levels. [F32, F41] Journal: International Economic Journal Pages: 27-51 Issue: 4 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000027 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000027 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:4:p:27-51 Template-Type: ReDIF-Article 1.0 Author-Name: Robert C. Shelburne Author-X-Name-First: Robert C. Author-X-Name-Last: Shelburne Title: Bilateral Intra-Industry Trade in a Multi-Country Helpman-Krugman Model Abstract: The factors that explain the level of intra-industry trade and its share of total trade in a multi-country version of the Helpman-Krugman model are derived. The role of similarity of endowment ratios and similarity of economic sizes differ in the multi-country version from the two country version of this model. It is also demonstrated that the volume of total trade, the volume of intra-industry trade and the volume of inter-industry trade can each be described by a modified gravity equation. A new diagrammatical device is introduced that illustrates the relationship between trade volume and similarity in country size. [F12] Journal: International Economic Journal Pages: 53-73 Issue: 4 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000028 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000028 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:4:p:53-73 Template-Type: ReDIF-Article 1.0 Author-Name: Gervais Jean-Philippe Author-X-Name-First: Gervais Author-X-Name-Last: Jean-Philippe Author-Name: Harvey E. Lapan Author-X-Name-First: Harvey E. Author-X-Name-Last: Lapan Title: Endogenous Choice of Trade Instrument Under Uncertainty Abstract: This Paper endogenizes the choice between import tariffs and quotas of two policy active countries in a duopsonistic world market. Without uncertainty, import quotas are welfare superior to import tariffs in equilibrium. If two importers can precommit to a type of instrument before deciding the level of the instrument to use in a future period, an import quota equilibrium emerges. We introduce asymmetric risk in the import demand schedule of the two importers. There exists a range of parameters in which a mixed equilibrium emerges, i.e. one country uses a tariff while the other restricts trade with an import quota. The likelihood that both importers choose a different trade instrument in equilibrium is increasing with the correlation coefficient of the two random shocks. [F13] Journal: International Economic Journal Pages: 75-96 Issue: 4 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000029 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000029 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:4:p:75-96 Template-Type: ReDIF-Article 1.0 Author-Name: Howard Michael Author-X-Name-First: Howard Author-X-Name-Last: Michael Title: Causality Between Exports, Imports and Income In Trinidad and Tobago Abstract: This study examines the relationship between exports, imports and income in the economy of Trinidad and Tobago, using the methodology of Granger causality and error correction modeling. Our results show that there is unidirectional Granger causation from exports to income (GDP), and bidirectional causation between exports and imports and imports and income. The Economy of Trinidad and Tobago is a petroleum exporting economy where oil-export booms raise income levels, but this is usually followed by a slump. The bivariate models should be interpreted with caution because of the possibility of omitted variable bias. [F14, C22] Journal: International Economic Journal Pages: 97-106 Issue: 4 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000030 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000030 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:4:p:97-106 Template-Type: ReDIF-Article 1.0 Author-Name: Amalia Morales Zumaquero Author-X-Name-First: Amalia Morales Author-X-Name-Last: Zumaquero Title: Purchasing Power Parity By sectors From Selected European Countries: Cointegration and Structural Breaks Abstract: In this paper we study the long-run Purchasing Power Parity (PPP) hypothesis by traded and non-traded sectors using cointegration techniques in the presence of structural breaks, for a set of European countries during the period 1975:1-1995:12. This approach is complementary to many existing approaches to investigate the PPP Hypothesis. We find evidence in favor of long-run PPP hypothesis when commodity prices and used in the presence of structural breaks. This result lends support to the integration process in the European Union. [C22, F30] Journal: International Economic Journal Pages: 107-119 Issue: 4 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000031 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000031 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:4:p:107-119 Template-Type: ReDIF-Article 1.0 Author-Name: Mark J. Holmes Author-X-Name-First: Mark J. Author-X-Name-Last: Holmes Author-Name: Maghrebi Nabil Author-X-Name-First: Maghrebi Author-X-Name-Last: Nabil Title: Non-Linearities, Regime Switching and the Relationship Between Asian Equity and Foreign Exchange Markets Abstract: Journal: International Economic Journal Pages: 121-139 Issue: 4 Volume: 16 Year: 2002 X-DOI: 10.1080/10168730200000032 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730200000032 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:16:y:2002:i:4:p:121-139 Template-Type: ReDIF-Article 1.0 Author-Name: Bernhard Heitger Author-X-Name-First: Bernhard Author-X-Name-Last: Heitger Title: MINIMUM WAGES AND EMPLOYMENT: THE CASE OF GERMAN UNIFICATION Abstract: Analysis in terms of the two-sector open economy shows that in bringing the market economy to East Germany, West Germany seems to have disregarded important fundamentals. Premature formation of a currency union led to a substantial real appreciation of the East German currency. Premature implementation of the West German system of wage bargaining resulted in inappropriate minimum wage schedules. Both measures made East German production possibilities and employment decline. [E24, P23] Journal: International Economic Journal Pages: 1-15 Issue: 1 Volume: 17 Year: 2001 X-DOI: 10.1080/10168730300080001 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300080001 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2001:i:1:p:1-15 Template-Type: ReDIF-Article 1.0 Author-Name: R. W. Hafer Author-X-Name-First: R. W. Author-X-Name-Last: Hafer Author-Name: Ali Kutan Author-X-Name-First: Ali Author-X-Name-Last: Kutan Title: FINANCIAL INNOVATION AND THE DEMAND FOR MONEY: EVIDENCE FROM THE PHILIPPINES Abstract: This paper tests whether financial innovations in the Philippines distorted the long-run relation between real money balances, income and interest rates. Using data for the monetary base, M1 and M3 over the period 1980-1998, we cannot reject the hypothesis that there does not exist a standard money demand relation between M1 and M3, real income and interest rates. However, when we allow for the impact of financial innovations, this finding is reversed for M1. Estimates of ECM models for these measures also show that financial innovations impacted real money balances for M1, but not M3. This evidence supports the Philippine central bank's choice of a monetary aggregate as its policy instrument to achieve its policy objectives. [E41, E58] Journal: International Economic Journal Pages: 17-27 Issue: 1 Volume: 17 Year: 2001 X-DOI: 10.1080/10168730300080002 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300080002 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2001:i:1:p:17-27 Template-Type: ReDIF-Article 1.0 Author-Name: Robert Kohn Author-X-Name-First: Robert Author-X-Name-Last: Kohn Title: ON SHIBATA'S NEGATION OF LUMP-SUM TRANSFERS IN GLOBAL WARMING CONTROL Abstract: When all countries tax domestic emissions of a pure global pollutant at a rate equal to global marginal damage, some of these countries - typically, developing countries - are likely to be worse off. To win the cooperation of such developing countries, it is often advocated that they receive lump-sum compensation from the industrialized countries. To the contrary, Shibata (1996, p.298) argues that it is “not possible to make developing countries any better off by lump-sum transfers of the [tax] revenues.” This pessimistic outlook is challenged in the present paper, which reaffirms the case for international lump-sum transfers. [F02, H23, Q23, Q25] Journal: International Economic Journal Pages: 29-41 Issue: 1 Volume: 17 Year: 2001 X-DOI: 10.1080/10168730300080003 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300080003 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2001:i:1:p:29-41 Template-Type: ReDIF-Article 1.0 Author-Name: Hirofumi Shibata Author-X-Name-First: Hirofumi Author-X-Name-Last: Shibata Title: ON SHIBATA'S NEGATION OF LUMP-SUM TRANSFERS IN GLOBAL WARMING CONTROL: REJOINDER Abstract: Kohn's criticism of my negation of the role of lump-sum transfers financed by a global emission tax is based on two unacceptable premises. (1) He assumes a world consisting of cooperative nations. But if nations were cooperative no corrective tax is needed as they could internalize external diseconomies without a super national governmental intervention. A global tax analysis must assume non-cooperative nations as I did. (2) He treats lump-sum transfers as negotiable payments for compliance by the country unfavorable affected by the tax. But the standard interpretation of the lump-sum transfers is payments that do not influence private economic decisions. In my analysis lump-sum transfers have their usual interpretation. This rejoinder also reinforces my original claim with a formal proof that every nation's post-tax welfare is independent of lump-sum transfers and of their aggregate resources. [F02, H23, Q23, Q25] Journal: International Economic Journal Pages: 43-55 Issue: 1 Volume: 17 Year: 2001 X-DOI: 10.1080/10168730300080004 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300080004 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2001:i:1:p:43-55 Template-Type: ReDIF-Article 1.0 Author-Name: Alberto Bucci Author-X-Name-First: Alberto Author-X-Name-Last: Bucci Title: HORIZONTAL INNOVATION, MARKET POWER AND GROWTH Abstract: I build a generalised model of horizontal product innovation and economic growth taking explicitly into account the most relevant insights stemming from the recent literature on this topic. What results from the analysis is that, when innovation is both deterministic and horizontal, the relationship between market power and aggregate growth is not robust at all. It is also found that not only technology, but also the inter-sectoral competition for the same resource affects growth. This is particularly relevant in terms of public policies aimed at the strategic allocation of skilled workers to the different sectors of the economy. [D43, L16, O31, O41] Journal: International Economic Journal Pages: 57-82 Issue: 1 Volume: 17 Year: 2001 X-DOI: 10.1080/10168730300080005 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300080005 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2001:i:1:p:57-82 Template-Type: ReDIF-Article 1.0 Author-Name: Sanghack Lee Author-X-Name-First: Sanghack Author-X-Name-Last: Lee Title: TWO-STAGE CONTESTS WITH ADDITIVE CARRYOVERS* Abstract: This paper examines two-stage contests in which players in two groups compete for a prize. In the first stage, each group selects a finalist through intra-group competition. In the second stage the finalists compete for the prize. The first-stage efforts are carried over to the second stage through the contest success function and cost functions. The carryover of efforts proves to increase aggregate efforts when the carryovers are player-specific. In the case of group-specific carryovers, however, the aggregate efforts may either increase or decrease in the carryover rates, depending upon the value of the exponent R of the contest success function. [D62, D72, D74] Journal: International Economic Journal Pages: 83-99 Issue: 1 Volume: 17 Year: 2001 X-DOI: 10.1080/10168730300080006 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300080006 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2001:i:1:p:83-99 Template-Type: ReDIF-Article 1.0 Author-Name: Nejib Hachicha Author-X-Name-First: Nejib Author-X-Name-Last: Hachicha Title: EXPORTS, EXPORT COMPOSITION AND GROWTH: A SIMULTANEOUS ERROR-CORRECTION MODEL FOR TUNISIA Abstract: The export-economic growth relationship has been dealt with in several empirical studies concerning cross-section and time series data. Although this research has contributed to measure the impact of exports on economic growth, it still has three main drawbacks. First, the studies on cross-section data suppose homogeneous production techniques for the countries involved. Second, most of the research introduces a bias in the estimation of the export impact on economic growth since it neglects all effects of simultaneity between these two variables. Finally, most of the estimated regressions in these studies may constitute 'spurious' regressions since the analysis of the stationarity of the variables is missing. This paper considers the Tunisian case and tries to study the dynamics between growth and exports through a simultaneous error correction model. The study shows the presence of a positive and significant relationship between exports and economic growth driven by manufactured exports rather than food-processing exports and international tourism. The measurement of such a relationship is understated if the simultaneity between export expansion and G.D.P growth is ignored. [C 32, C 51, C 52, F 43] Journal: International Economic Journal Pages: 101-120 Issue: 1 Volume: 17 Year: 2001 X-DOI: 10.1080/10168730300080007 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300080007 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2001:i:1:p:101-120 Template-Type: ReDIF-Article 1.0 Author-Name: George Hondroyiannis Author-X-Name-First: George Author-X-Name-Last: Hondroyiannis Title: THE WAGE GROWTH AND INFLATION NEXUS IN A DYNAMIC MULTIVARIATE CONTEXT: NEW EVIDENCE FROM GREECE Abstract: Different macroeconomic schools of thought have provided different explanations for the relationship between the price level and wage level. This paper investigates the linkages between price level and wage level employing quarterly data in Greece over the period 1980-98. To account for influences on the bivariate relationship of monetary and exchange rate policies, money supply and exchange rate were added to the model. In the empirical analysis the Johansen maximum likelihood technique is applied to search for a long-run relationship among the macroeconomic variables. The application of vector error-correction models is used to investigate the response of inflation and wage inflation to monetary and exchange rate policies aiming at testing the sources of price-wage variations. The estimation results employing the vector error-correction models indicate that a unidirectional causality exists from wages to price level. In addition, the results indicate that inflation in the long run is determined by changes in money supply and exchange rate. The results imply that since wages have an impact on price level, wage inflation can be used as monetary policy information variable. [C22, Å31] Journal: International Economic Journal Pages: 121-138 Issue: 1 Volume: 17 Year: 2001 X-DOI: 10.1080/10168730300080008 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300080008 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2001:i:1:p:121-138 Template-Type: ReDIF-Article 1.0 Author-Name: James Gaisford Author-X-Name-First: James Author-X-Name-Last: Gaisford Author-Name: William Kerr Author-X-Name-First: William Author-X-Name-Last: Kerr Title: DEADLOCK IN GENEVA: THE BATTLE OVER EXPORT SUBSIDIES IN AGRICULTURE Abstract: This article provides a systematic game-theoretic analysis of retaliatory export subsidies where each country's government is driven by political -economy considerations. The model provides a powerful explanation of both the grain wars of the 1980s and the difficulties facing the post-Uruguay Round negotiations in Geneva over further reductions in agricultural export subsidies. While an initial round of cuts in export subsidies can be designed to confer political-economy benefits on both the US and EU governments, subsequent reductions need not be mutually beneficial for the two governments. The EU's current intransigence over export subsidies, therefore, appears to have a solid political-economy basis. [F13, Q17] Journal: International Economic Journal Pages: 1-17 Issue: 2 Volume: 17 Year: 2001 X-DOI: 10.1080/10168730300080009 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300080009 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2001:i:2:p:1-17 Template-Type: ReDIF-Article 1.0 Author-Name: Angelos Antzoulatos Author-X-Name-First: Angelos Author-X-Name-Last: Antzoulatos Author-Name: Naveen Seth Author-X-Name-First: Naveen Author-X-Name-Last: Seth Title: BANK LENDING TO LDCs: LESSONS FROM THE 1970s Abstract: We use a recently-compiled database with monthly observations, to analyse the determinants of syndicated loans to Latin American (L.A.) and East Asian countries, for the period 1972-1982. Our results indicate that the loans were to a large extent supply-driven, and thus provide econometric evidence that “overlending” was a significant determinant of them along with economic fundamentals in the borrowing countries. They also suggest that E. Asia's recent currency and banking crises will not likely develop into another “debt crisis”, precipitated by a prolonged withdrawal of private capital from the region. [F34, G15, N25, N26] Journal: International Economic Journal Pages: 19-36 Issue: 2 Volume: 17 Year: 2001 X-DOI: 10.1080/10168730300080010 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300080010 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2001:i:2:p:19-36 Template-Type: ReDIF-Article 1.0 Author-Name: Justino De La Cruz Martinez Author-X-Name-First: Justino De La Cruz Author-X-Name-Last: Martinez Title: DEMAND SHOCKS: EVIDENCE FROM A VECTOR AUTOREGRESSION MODEL OF MEXICO'S RECESSION AND RECOVERY IN THE 1990s Abstract: We analyze the recession and recovery of Mexico during the 1990s by estimating a vector autoregression of aggregate expenditures. The model suggests that, in addition to fiscal, monetary, and exchange rates policies, “expectational” shocks played a significant role in the 1995 recession but not in the insuring recovery. This indicates that when policy factors explain only a portion of the shocks, the public's pessimism and anxiety about the future should be considered important in policymaking. Finally, contrary to the conventional believe that depreciation will raise economic growth, this study finds that Peso depreciation will bring about a recession. [E32, C32] Journal: International Economic Journal Pages: 37-53 Issue: 2 Volume: 17 Year: 2001 X-DOI: 10.1080/10168730300080011 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300080011 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2001:i:2:p:37-53 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Pierdzioch Author-X-Name-First: Christian Author-X-Name-Last: Pierdzioch Title: NON-SEPARABLE CONSUMPTION-LABOR CHOICE AND THE INTERNATIONAL TRANSMISSION OF MONETARY POLICY SHOCKS: A NOTE Abstract: This paper derives in the model developed by Obstfeld and Rogoff (1995) a steady state that is stationary in the presence of monetary policy shocks. To this end, the impact of monetary policy shocks on the current account is shut off by assuming that the preferences of households exhibit a particular non-separability between consumption and labor supply. [F31, F41] Journal: International Economic Journal Pages: 55-64 Issue: 2 Volume: 17 Year: 2001 X-DOI: 10.1080/10168730300080012 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300080012 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2001:i:2:p:55-64 Template-Type: ReDIF-Article 1.0 Author-Name: Sang Hyup Lee Author-X-Name-First: Sang Hyup Author-X-Name-Last: Lee Title: A DURATION ANALYSIS OF THE ADOPTION OF PRIVATIZATION POLICY: EVIDENCE FROM THE TELECOMMUNICATIONS SECTOR IN THE ASIA-PACIFIC REGION Abstract: This paper provides an econometric analysis of the determinants of privatization of the telecommunications sector in the Asia-Pacific region. The following conclusions are drawn from the estimates of the Weibull models: 1) rather than the absolute level of network penetration, what really matters most in the privatization process is a country's telecom sector performance over a period of time; and 2) contrary to our presumption, a country's incentive for privatization does not hinge much on the overall budget deficit of the government. Policy implications of the main findings are discussed. [L96] Journal: International Economic Journal Pages: 65-78 Issue: 2 Volume: 17 Year: 2001 X-DOI: 10.1080/10168730300080013 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300080013 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2001:i:2:p:65-78 Template-Type: ReDIF-Article 1.0 Author-Name: Joon-Ho Hahm Author-X-Name-First: Joon-Ho Author-X-Name-Last: Hahm Author-Name: Jinho Kim Author-X-Name-First: Jinho Author-X-Name-Last: Kim Title: COST-AT-RISK AND BENCHMARK GOVERNMENT DEBT PORTFOLIO IN KOREA Abstract: This paper provides a framework to identify and achieve a benchmark portfolio structure for government debt based upon the trade-off between expected debt-service-cost and risk. Using actual Korean government debt data, we empirically derive a medium-term efficient frontier conditional upon the existing portfolio structure. In addition, a target benchmark portfolio is identified from the efficient frontier by employing a penalty function with cost-at-risk and duration gap as two penalty factors. The target portfolio identified above also implies an optimal borrowing policy as to the maturity mix of the government bond issuance. [H6, G1, F3] Journal: International Economic Journal Pages: 79-103 Issue: 2 Volume: 17 Year: 2001 X-DOI: 10.1080/10168730300080014 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300080014 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2001:i:2:p:79-103 Template-Type: ReDIF-Article 1.0 Author-Name: Kiseok Hong Author-X-Name-First: Kiseok Author-X-Name-Last: Hong Title: CONSUMER DURABLES AND THE INTEREST RATE Abstract: This paper investigates the relationship between consumption of a durable good and the interest rate. According to the standard Permanent Income Hypothesis (PIH), a rise in the interest rate is expected to decrease durables consumption, and the magnitude of the interest rate effect should meet certain restrictions. This implication of the PIH is tested using US data. Empirical results of this paper indicate that, although durables consumption is negatively correlated with the interest rate, the magnitude of the estimated effect is substantially smaller than requested by the standard theory. This suggests that the influence of monetary policy on durables expenditure may not be as large as previous authors claim. In attempts to explain the small effects of the interest rate, frictions such as adjustment costs and liquidity constraints are examined. [E21] Journal: International Economic Journal Pages: 105-127 Issue: 2 Volume: 17 Year: 2001 X-DOI: 10.1080/10168730300080015 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300080015 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2001:i:2:p:105-127 Template-Type: ReDIF-Article 1.0 Author-Name: Don Clark Author-X-Name-First: Don Author-X-Name-Last: Clark Author-Name: Denise Stanley Author-X-Name-First: Denise Author-X-Name-Last: Stanley Title: DETERMINANTS OF INTRAINDUSTRY TRADE BETWEEN THE UNITED STATES AND INDUSTRIAL NATIONS Abstract: This paper investigates determinants of intraindustry trade between the United States and twenty-two industrial nations. Included here are country-level characteristics suggested by modern models of monopolistic competition and trade and industry-level variables relating to imperfect competition, scale economies, and product differentiation. Country-level determinants of intraindustry trade include relative factor endowment differences, relative country size differences, distance, trade orientation, and the trade balance. Measures of factor intensity, scale economies, market structure, and product differentiation are included as country-level variables. Findings generally support predictions of modern trade theories. [F1] Journal: International Economic Journal Pages: 1-17 Issue: 3 Volume: 17 Year: 2003 Keywords: F1, X-DOI: 10.1080/10168730300080016 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300080016 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2003:i:3:p:1-17 Template-Type: ReDIF-Article 1.0 Author-Name: M. T. Alguacil Author-X-Name-First: M. T. Author-X-Name-Last: Alguacil Author-Name: V. Orts Author-X-Name-First: V. Author-X-Name-Last: Orts Title: Inward Foreign Direct Investment and Imports in Spain Abstract: In this paper, we investigate the links between inward foreign direct investment and imports in Spain. We show that FDI in this country has been trade-oriented, encouraging greater imports. Foreign production thus magnifies its potential gains with the conventional benefits of trade. A cointegration analysis in a multivariate VAR model is applied for Granger temporal causality testing. The strength and direction of the causal relationship are shown through the dynamic variance decomposition and the impulse response technique. [Fl0, F20, F21] Journal: International Economic Journal Pages: 19-38 Issue: 3 Volume: 17 Year: 2003 X-DOI: 10.1080/10168730300000002 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300000002 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2003:i:3:p:19-38 Template-Type: ReDIF-Article 1.0 Author-Name: Dimitris Christopoulos Author-X-Name-First: Dimitris Author-X-Name-Last: Christopoulos Author-Name: EFthymios Tsionas Author-X-Name-First: EFthymios Author-X-Name-Last: Tsionas Title: A Reassessment Of Balance Of Payments Constrained Growth: Results From Panel Unit Root And Panel Cointegration Tests Abstract: The paper reassesses the empirical evidence for Thirlwall's law in seven industrial countries by using panel unit root and panel cointegration tests including Johansen maximum likelihood cointegration tests. Current practice restricts attention to time series residual based cointegration tests, which are known to have low power and are subject to normalization problems. Since economic time series are typically short, it is desirable to exploit panel data in order to draw sharper inferences. The empirical results reveal that imports are cointegrated with terms of trade and income (although residual-based tests indicate the opposite). We find that, with the exception of Australia, Thirlwall's law holds. [C22, C23, O40, O57] Journal: International Economic Journal Pages: 39-54 Issue: 3 Volume: 17 Year: 2003 X-DOI: 10.1080/10168730300000003 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300000003 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2003:i:3:p:39-54 Template-Type: ReDIF-Article 1.0 Author-Name: Seon-Jae Kim Author-X-Name-First: Seon-Jae Author-X-Name-Last: Kim Title: Information Technology and Its Impact on Economic Growth and Productivity In Korea Abstract: The purpose of this study is to examine the impact of IT on economic growth and productivity in Korea during the 1971-2000 periods. The growth contributions from standard input factors, IT capital inputs, and the business cycle effect are calculated on the basis of the growth accounting framework. The study also examines the source of productivity growth, using the extended growth model and drawing attention to the role that IT and knowledge capital may have played. The results show that IT capital contributed 16.3 percent to the output growth and has a strong positive effect on the growth of labor productivity in the long run. [04] Journal: International Economic Journal Pages: 55-75 Issue: 3 Volume: 17 Year: 2003 X-DOI: 10.1080/10168730300000004 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300000004 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2003:i:3:p:55-75 Template-Type: ReDIF-Article 1.0 Author-Name: Don Clark Author-X-Name-First: Don Author-X-Name-Last: Clark Author-Name: Denise Stanley Author-X-Name-First: Denise Author-X-Name-Last: Stanley Title: Determinants of Intraindustry Trade Between the United States and Industrial Nations Abstract: This paper investigates determinants of intraindustry trade between the United States and twenty-two industrial nations. Included here are country-level characteristics suggested by modern models of monopolistic competition and trade and industry-level variables relating to imperfect competition, scale economies, and product differentiation. Country-level determinants of intraindustry trade include relative factor endowment differences, relative country size differences, distance, trade orientation, and the trade balance. Measures of factor intensity, scale economies, market structure, and product differentiation are included as country-level variables. Findings generally support predictions of modern trade theories. [F1] Journal: International Economic Journal Pages: 1-18 Issue: 3 Volume: 17 Year: 2003 X-DOI: 10.1080/10168730300000001 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300000001 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2003:i:3:p:1-18 Template-Type: ReDIF-Article 1.0 Author-Name: Stephen Devadoss Author-X-Name-First: Stephen Author-X-Name-Last: Devadoss Author-Name: Wongun Song Author-X-Name-First: Wongun Author-X-Name-Last: Song Title: Oligopsonistic Intermediate Input and Patterns of Trade Abstract: We examine the validities of traditional trade theorems and patterns of trade for an economy with an oligopsonistic intermediate input. Specifically, the model consists of two final goods. one intermediate good, and two primary factors. One final good and the intermediate good are produced using primary factors, capital and labor. The second final good is produced using the intermediate good and labor. All markets operate under perfect competition except the intermediate good market, which is oligopsonistic. This model reflects the real world phenomena of oligopsony power excerted by some industries (e.g., the food processing industry) in the intermediate good purchases. Our analysis shows that some of the traditional trade theorems and H.O trade pattern may be overturned if the factor intensity of the competitive sector lies between those of oligopsony and intermediate good sectors. [F12] Journal: International Economic Journal Pages: 77-97 Issue: 3 Volume: 17 Year: 2003 X-DOI: 10.1080/10168730300000005 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300000005 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2003:i:3:p:77-97 Template-Type: ReDIF-Article 1.0 Author-Name: Mohamed Jellal Author-X-Name-First: Mohamed Author-X-Name-Last: Jellal Author-Name: Francois-Charles Wolff Author-X-Name-First: Francois-Charles Author-X-Name-Last: Wolff Title: Dual Labor Markets And Strategic Efficiency Wage Abstract: We consider a dual labor markets model in which the primary sector requires the presence of eMiciency wage, while the secondary sector is competitive. We show that the Solow condition does not hold in a Stackelberg equilibrium where the primary sector acts as a leader and the secondary one as a follower.[J41] Journal: International Economic Journal Pages: 99-112 Issue: 3 Volume: 17 Year: 2003 X-DOI: 10.1080/10168730300000006 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300000006 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2003:i:3:p:99-112 Template-Type: ReDIF-Article 1.0 Author-Name: Gongpil Choi Author-X-Name-First: Gongpil Author-X-Name-Last: Choi Title: Structural Changes and the Scope of Inflation Targeting in Korea Abstract: A small, open macroeconomic model that accounts for new financial accelerator effects (the effects of fluctuations in asset prices on bank credit and economic activity) is developed to evaluate various policy rules for inflation targeting. Given the conditions of asset markets and the fragility of the financial sector, monetary policy responses can potentially amplify the financial accelerator effect. Simulations are used to compare various forms of inflation targeting using a model that emphasizes long-term inflation expectations, output changes, and the asset price channels. The simulations suggest that a successful outcome can be obtained by adhering to simple forward-looking rules, rather than backward-looking policy rules. Furthermore, inflation targeting can contribute to price as well as output stability by helping to keep the financial accelerator from being activated. Inflation targeting in emerging economies can provide an environment conducive to long-term capital market development. [E51,F3,F4] Journal: International Economic Journal Pages: 113-142 Issue: 3 Volume: 17 Year: 2003 X-DOI: 10.1080/10168730300000007 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300000007 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2003:i:3:p:113-142 Template-Type: ReDIF-Article 1.0 Author-Name: Dene Hurley Author-X-Name-First: Dene Author-X-Name-Last: Hurley Title: Horizontal and Vertical Intra-Industry Trade: The Case of Asean Trade in Manufactures Abstract: For over two decades prior to the Asian Currency crisis of 1997, the economies of the ASEAN-5 underwent an impressive economic expansion while increasing their openness to trade. This paper examines the role of intra-industry trade (IIT) in intra-ASEAN trade. Focusing on trade in manufactures, it breaks down IIT by vertically (VIIT) and horizontally (HIIT) differentiated goods, and identifies country-specific factors which drive them. By 1996, while 60% of the total intra-ASEAN trade constituted IIT, the share of IIT in trade in manufactures was even higher, dominated by VIIT which reflected differences in capital-labor intensity. Market size and foreign direct investment also influenced both VIIT and HIIT. [F14] Journal: International Economic Journal Pages: 1-14 Issue: 4 Volume: 17 Year: 2003 X-DOI: 10.1080/10168730300080023 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300080023 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2003:i:4:p:1-14 Template-Type: ReDIF-Article 1.0 Author-Name: Chae-Deug Yi Author-X-Name-First: Chae-Deug Author-X-Name-Last: Yi Title: An Empirical Analysis of Ricardian Equivalence on Real Exchange Rate and Current Account: Korea Abstract: This paper investigates the responses of real exchange rate and current account as well as consumption in a small open economy to fiscal policies using an alternative time horizon model. Cointegration tests present that there is no stable relationship between the fiscal variables and the real exchange rate, current account, or consumption. The maximum likelihood estimation suggests that fiscal policies seem not to be much effective as the conventional or finite horizon model predicts. REP with infinite horizons seems to be more conceivable to explaining the fluctuation of consumption, real exchange rate, and current account in Korea. [F31, F32] Journal: International Economic Journal Pages: 61-83 Issue: 4 Volume: 17 Year: 2003 X-DOI: 10.1080/10168730300080027 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300080027 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2003:i:4:p:61-83 Template-Type: ReDIF-Article 1.0 Author-Name: M. Imam Alam Author-X-Name-First: M. Imam Author-X-Name-Last: Alam Title: Manufactured Exports, Capital Good Imports, and Economic Growth: Experience of Mexico and Brazil Abstract: This paper examines the export-led growth hypothesis using data from two Latin American countries, Mexico and Brazil, in a production function framework. It addresses some of the limitations of existing methods of testing the hypothesis. Contrary to popular belief, we do not find any evidence to support the hypothesis. Imported capital goods appear to be very significant in the growth process of these two countries. To check the robustness of the results, this study uses two different cointegrating procedures to determine the number of cointegrating vectors, and three different methods to estimate the parameters of the long-run relations. The results are robust across estimation techniques. [F43, F14, O47, O54] Journal: International Economic Journal Pages: 85-105 Issue: 4 Volume: 17 Year: 2003 X-DOI: 10.1080/10168730300080028 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300080028 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2003:i:4:p:85-105 Template-Type: ReDIF-Article 1.0 Author-Name: Jeong-Yoo Kim Author-X-Name-First: Jeong-Yoo Author-X-Name-Last: Kim Title: Entry Deterrence and Entry Inducement in an Industry with Complementary Products Abstract: This paper discusses the possibility of signal jamming between multiple informed incumbents with conflicting interests and examines the implication of the possibility in the limit pricing literature. I find fully separating equilibria where the incumbent competing against the entrant does not use limit pricing in an optimal response to “inductive pricing” by another incumbent desiring entry i.e., charging a lower price than the static equilibrium price to induce entry. Thus, contrary to Milgrom and Roborts, the consequences of asymmetric information for welfare are ambiguous even in fully separating equilibria. [L11] Journal: International Economic Journal Pages: 107-123 Issue: 4 Volume: 17 Year: 2003 X-DOI: 10.1080/10168730300080029 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730300080029 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2003:i:4:p:107-123 Template-Type: ReDIF-Article 1.0 Author-Name: JoaoRicardo Faria Author-X-Name-First: JoaoRicardo Author-X-Name-Last: Faria Author-Name: Francisco Galrao Caneiro Author-X-Name-First: Francisco Galrao Author-X-Name-Last: Caneiro Title: Devalution, Output and Wages Abstract: This paper analyses the relationship between the real exchange rate, real wages and aggregate output. We present a model in which changes in aggregate output and in the real exchange rate precede changes in real wages, and where output is expected to positively affect real wages while changes in the real exchange rate are expected to negatively affect real wages. The empirical analysis is carried out for the case of Brazil, a country which has recently undergone an exchange-rate-based stabilization plan and where the impact of exchange rate anchoring on the real sector seems to be relevant. Using monthly data for the period 1985 to 2001, Granger causality tests and Johansen's Maximum likelihood estimates confirmed the assumptions of our model by showing that real wages are positively affected by output and negatively impacted by the real exchange rate in the long run. [F31, F41, J39] Journal: International Economic Journal Pages: 15-27 Issue: 4 Volume: 17 Year: 2003 X-DOI: 10.1080/751248069 File-URL: http://www.tandfonline.com/doi/abs/10.1080/751248069 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2003:i:4:p:15-27 Template-Type: ReDIF-Article 1.0 Author-Name: Debashis Pal Author-X-Name-First: Debashis Author-X-Name-Last: Pal Author-Name: Mark White Author-X-Name-First: Mark Author-X-Name-Last: White Title: Intra-Industry Trade And Strategic Trade Police In The Presence of Public Firms Abstract: The literature on intra-industry trade and strategic trade policy has always considered only profit-maximizing private firms being active in international trade. This paper incorporates state-owned public firms in the context of intra-industry trade. The existence of welfare-maximizing public firms significantly affects intra-industry trade and strategic trade policy. Compared to when both firms are private, the existence of public firms lowers optimal tariffs and subsidies, but also lowers the total volume of trade between the two countries. The lower volume of trade, however, does not translate into lower levels of welfare for the trading countries. [F12, F13, D43, L32] Journal: International Economic Journal Pages: 29-41 Issue: 4 Volume: 17 Year: 2003 X-DOI: 10.1080/751248070 File-URL: http://www.tandfonline.com/doi/abs/10.1080/751248070 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2003:i:4:p:29-41 Template-Type: ReDIF-Article 1.0 Author-Name: Nejib Hachicha Author-X-Name-First: Nejib Author-X-Name-Last: Hachicha Title: Capital Inflows-National Saving Dynamics in Tunisia: Evidence from Cointegration, Weak Exogeneity and Simultaneous Error Correction Modelling Abstract: The negative relationship between capital inflows and savings in less developed countries is an accepted fact in the existing literature. However, this result is based essentially on standard econometrics which ignores the nonstationarity of these two variables. This study investigates the 'direct' and 'indirect' effect of capital inflows on savings in Tunisia using Johansen's multivariate cointegration technique, weak exogeneity test and simultaneous error correction modelling. In the short and long run, the econometric estimates show that capital inflows have a negative effect on domestic savings, which invalidates the Chenery-Strout thesis. Nevertheless, the direction of causality between the aggregates being dealt with still remains a subject of debate. Relying on time-series data of the Tunisian economy, Granger's causality test shows a causal relationship in the long term running from domestic savings to capital inflows. In the short term, however, this paper reveals a two-way causation. [E20, F35, C32, C51] Journal: International Economic Journal Pages: 43-60 Issue: 4 Volume: 17 Year: 2003 X-DOI: 10.1080/751248071 File-URL: http://www.tandfonline.com/doi/abs/10.1080/751248071 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:17:y:2003:i:4:p:43-60 Template-Type: ReDIF-Article 1.0 Author-Name: Warwick McKibbin Author-X-Name-First: Warwick Author-X-Name-Last: McKibbin Author-Name: Jong-Wha Lee Author-X-Name-First: Jong-Wha Author-X-Name-Last: Lee Author-Name: Inkyo Cheong Author-X-Name-First: Inkyo Author-X-Name-Last: Cheong Title: A dynamic analysis of the Korea-Japan free trade area: simulations with the G-cubed Asia-Pacific model Abstract: This paper explores the effects of the proposed free trade agreement between Japan and Korea. Our experiments are based on a new dynamic simulation model, called the Asia-Pacific G-cubed Model, which incorporates the rational expectations and intertemporal optimizing behaviour of agents. The simulations show that both Korea and Japan benefit from the bilateral FTA although other countries lose. The output gains from the FTA are estimated to be larger when trade liberalization is undertaken by a tariff reduction that is more gradually phased-in than rapid. JEL Classification: F15 Journal: International Economic Journal Pages: 3-32 Issue: 1 Volume: 18 Year: 2004 Keywords: Japan, Korea, FTA, dynamic, X-DOI: 10.1080/1351161042000180610 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1351161042000180610 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2004:i:1:p:3-32 Template-Type: ReDIF-Article 1.0 Author-Name: Jens Suedekum Author-X-Name-First: Jens Author-X-Name-Last: Suedekum Title: Selective migration, union wage setting and unemployment disparities in West Germany Abstract: There are wide and persistent disparities between regional unemployment rates in West Germany. Furthermore, regions with high unemployment tend to have relatively low effective wages and vice versa. Internal migration is driven by these spatial disparities. However, mobility will not work as an adjustment mechanism, but rather perpetuate regional imbalances if there is a skill bias within the group of internal migrants. JEL Classification: J6, R11 Journal: International Economic Journal Pages: 33-48 Issue: 1 Volume: 18 Year: 2004 Keywords: Regional unemployment, internal migration, collective bargaining, X-DOI: 10.1080/1351161042000180629 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1351161042000180629 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2004:i:1:p:33-48 Template-Type: ReDIF-Article 1.0 Author-Name: Felix Rioja Author-X-Name-First: Felix Author-X-Name-Last: Rioja Title: Infrastructure and sectoral output along the road to development Abstract: Public infrastructure is one of the foundations for economic growth. Empirical research has found that public infrastructure can have different effects in different sectors of the economy. The theoretical literature, however, has concentrated in one-sector growth models. This paper develops a three-sector model (agriculture, manufacturing and services) to study the effects of infrastructure. The model is calibrated and solved numerically using parameters from seven Latin American countries. Results show that the largest gains would have been obtained at an early stage of development in the decade of the 1960s. The seven Latin American countries would have also benefited from additional public investment in the 1990s, especially the service sector. This result also has implications for the early 2000s, as infrastructure expenditures have not increased from the 1990s levels. JEL Classification: O4, H5 Journal: International Economic Journal Pages: 49-64 Issue: 1 Volume: 18 Year: 2004 Keywords: Public infrastructure, multi-sector model, Latin America, X-DOI: 10.1080/1351161042000180638 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1351161042000180638 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2004:i:1:p:49-64 Template-Type: ReDIF-Article 1.0 Author-Name: Nicholas Odhiambo Author-X-Name-First: Nicholas Author-X-Name-Last: Odhiambo Title: Money and physical capital are complementary in kenya Abstract: In this paper, two models have been used to test the relevance of McKinnon's complementarity hypothesis in Kenya. In the first model, the demand for money has been included in the savings function and, simultaneously, the savings rate has been included in the real money balances function. In the second model, the investment variable has been included in the money demand function. Contrary to the results obtained from some previous studies, the paper finds strong support for McKinnon's complementarity hypothesis in both models. This applies irrespective of whether the models are estimated in a static long-run formulation (cointegration model) or in the dynamic formulation (error correction model). The paper therefore concludes that money and physical capital are complementary in Kenya. Journal: International Economic Journal Pages: 65-78 Issue: 1 Volume: 18 Year: 2004 Keywords: JEL Classification: E2, H5, Kenya, money, physical capital, Johanssen-Juselius Coitegration Model, X-DOI: 10.1080/1351161042000180647 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1351161042000180647 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2004:i:1:p:65-78 Template-Type: ReDIF-Article 1.0 Author-Name: Chulhee Lee Author-X-Name-First: Chulhee Author-X-Name-Last: Lee Title: Intra-household transfers and old-age security in America, 1890-1950 Abstract: This paper explores the economic status of the elderly in late nineteenth and early twentieth century America. It has been widely believed that reduced earnings of ageing workers in these periods were fully supplemented by increased earnings of children. The patterns of individual consumption expenditures, however, indicate that children's supports were no longer an important means of old-age security after the end of the nineteenth century. Older males who were out of the labour force were much poorer than active workers of a similar age. The retired were not as much protected by family support as active workers. This result indicates that the previous studies based mainly on active workers overstate the extent of economic progress of the entire elderly population in the industrial era. This study tends to support the conventional belief that the rise of the welfare state was a response to the emerging social problems in the era of industrialization such as unemployment, poverty, and dependence of the elderly. Journal: International Economic Journal Pages: 79-102 Issue: 1 Volume: 18 Year: 2004 Keywords: JEL Classification: J14, Ageing, expenditure, family strategy, retirement, income, X-DOI: 10.1080/1351161042000180656 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1351161042000180656 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2004:i:1:p:79-102 Template-Type: ReDIF-Article 1.0 Author-Name: Imad Moosa Author-X-Name-First: Imad Author-X-Name-Last: Moosa Author-Name: Jae Kim Author-X-Name-First: Jae Author-X-Name-Last: Kim Title: Direct and indirect forecasting of the money multiplier and velocity of circulation in the United Kingdom Abstract: This paper compares the direct and indirect methods of predicting the money multiplier and velocity of circulation in the UK economy. Forecasts are generated using the autoregressive (AR) model and Harvey's structural time series model. In addition to point forecasts, prediction intervals (calculated by using the recently proposed bootstrap-after-bootstrap) are used for comparing forecasting accuracy. The results turn out to be mixed but the overall evidence seems to be in favour of the direct method. It is suggested that this may be due to the pooling of time series (as implied by the definition), which reduces the noise associated with individual time series. Journal: International Economic Journal Pages: 103-118 Issue: 1 Volume: 18 Year: 2004 Keywords: JEL Classification: E5, Autoregressive model, bootstrap, Harvey's Structural Time Series Model, X-DOI: 10.1080/1351161042000180665 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1351161042000180665 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2004:i:1:p:103-118 Template-Type: ReDIF-Article 1.0 Author-Name: Hong Zhang Author-X-Name-First: Hong Author-X-Name-Last: Zhang Title: The impact of China's accession to the WTO on its economy: an imperfect competitive CGE analysis Abstract: To examine the impact of trade barrier reductions on the Chinese economy following its WTO accession, a single-country, static CGE (Computable General Equilibrium) model is constructed, which incorporates certain elements of imperfect competition in China's current economic situation. China's real GDP and total employment are expected to rise by small degrees, while the general price level may decline by a few percentage points. Total imports would rise by more than 10%, whereas total exports would increase far less. China's trade surplus is, therefore, likely to shrink substantially and its dependence upon foreign trade is likely to rise by a few percentage points. A sensitivity analysis confirms the robustness of the simulation results. A comparison with other CGE studies on China's trade liberalization also shows the plausibility of this study's predictions. JEL Classification: F17, C68 Journal: International Economic Journal Pages: 119-137 Issue: 1 Volume: 18 Year: 2004 Keywords: China, trade liberalization, CGE model, imperfect competition, X-DOI: 10.1080/10168730410001684596 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730410001684596 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2004:i:1:p:119-137 Template-Type: ReDIF-Article 1.0 Author-Name: Rodney Paul Author-X-Name-First: Rodney Author-X-Name-Last: Paul Title: A time-series approach to the determination of savings rates Abstract: Time series analysis is used to study the savings rate and its determinants. The real effective exchange rate is introduced as a new independent variable in the savings function. Borrowing constraints, the current account balance, real rate of interest, macroeconomic stability, and age dependency are shown to be significant determinants of the savings rate. In addition, the real effective exchange rate is found to be significant across countries. Violations of Purchasing Power Parity are shown to explain some of the differences in savings rates between Canada, Japan, the United Kingdom and the United States. Journal: International Economic Journal Pages: 147-159 Issue: 2 Volume: 18 Year: 2004 Keywords: Savings, purchasing power parity, time-series, X-DOI: 10.1080/1016873042000228303 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000228303 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2004:i:2:p:147-159 Template-Type: ReDIF-Article 1.0 Author-Name: Taeyoung Doh Author-X-Name-First: Taeyoung Author-X-Name-Last: Doh Author-Name: Keunkwan Ryu Author-X-Name-First: Keunkwan Author-X-Name-Last: Ryu Title: Analysis of loan guarantees among the Korean Chaebol affiliates Abstract: This paper analyses corporate loan guarantees among the Korean chaebol affiliates. Loan guarantees are found to be efficiency-neutral under a set of ideal conditions characterized by perfect and symmetric information, no agency problem, and no governmental interference in private financial contracts. In reality though, corporate loan guarantees have negative as well as positive effects. The negative effects of loan guarantees arise from the agency problem between the controlling minority shareholders and outside investors. Government's implicit support to financial institutions worsens the problem. Without such distortions, a loan guarantee by the guarantor firm may signal the quality of the investment project of the borrowing firm, if the guarantor firm has more information than the lending bank with regards to the type of the borrowing firm's investment project. Journal: International Economic Journal Pages: 161-178 Issue: 2 Volume: 18 Year: 2004 Keywords: Agency problem, chaebol, controlling minority shareholder, information asymmetry, loan guarantee, X-DOI: 10.1080/1016873042000228312 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000228312 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2004:i:2:p:161-178 Template-Type: ReDIF-Article 1.0 Author-Name: Aidan Hollis Author-X-Name-First: Aidan Author-X-Name-Last: Hollis Author-Name: Lasheng Yuan Author-X-Name-First: Lasheng Author-X-Name-Last: Yuan Title: Competition policy in open economies Abstract: What is the effect of national antitrust policies in a world with international trade? Traditionally, economic analysis of mergers has assumed a closed economy, which—as we show in this paper—may lead to errant policy in an open economy. We use a very simple model to highlight some key issues in optimal competition policy when trade is important, and compare the nationally optimal number of firms with the globally optimal number of firms in a free trade environment. We show that countries will choose a competition policy that is 'too strict' in the sense that they will prefer to have more firms than is globally optimal, implying that convergence in competition policy should generally lead to a reduction in the number of firms. We also examine the strategic interaction between domestic and foreign competition policy when there is free trade and show that small and large countries will react very differently to changes in the other's policies. Journal: International Economic Journal Pages: 179-193 Issue: 2 Volume: 18 Year: 2004 Keywords: Competition policy, trade, X-DOI: 10.1080/1016873042000228321 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000228321 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2004:i:2:p:179-193 Template-Type: ReDIF-Article 1.0 Author-Name: Chung-Hua Shen Author-X-Name-First: Chung-Hua Author-X-Name-Last: Shen Author-Name: Shyh-Wei Chen Author-X-Name-First: Shyh-Wei Author-X-Name-Last: Chen Title: Long swing in appreciation and short swing in depreciation and does the market not know it?—the case of Taiwan Abstract: This paper finds an asymmetric swing in Taiwan's exchange rate. In contrast to the developed countries, whose exchange rates exhibit long swings in both appreciation and depreciation regimes, the long swing only exists in an appreciation regime for Taiwan. A short swing, however, is found during a depreciation regime in Taiwan. These results may reflect to some extent the central bank's preference, which is to have a let-it-go policy during depreciation and a slowdown policy in appreciation. In addition, it may simply reflect the Japanese yen's influences. Journal: International Economic Journal Pages: 195-213 Issue: 2 Volume: 18 Year: 2004 Keywords: Long swing, uncovered interest parity, central bank preference, X-DOI: 10.1080/1016873042000228330 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000228330 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2004:i:2:p:195-213 Template-Type: ReDIF-Article 1.0 Author-Name: Chongmin Kim Author-X-Name-First: Chongmin Author-X-Name-Last: Kim Title: Corporate financial policy with pension accounts: an extension of the Modigliani-Miller theorem Abstract: We build a model of an incomplete market economy with a firm, which we apply to the study of corporate financial policies with pension accounts. We show that prior to ERISA, even though the sponsoring firm's integral financial policy is neutral for its market value, it may affect the economy by creating a pension call option. On the other hand, in the post-ERISA periods, the firm's financial policy is not only neutral for its value but also has no real effect on the economy. Thus, the Modigliani-Miller theorem is valid in this sense. Journal: International Economic Journal Pages: 215-236 Issue: 2 Volume: 18 Year: 2004 Keywords: Integral financial policy, ERISA, Modigliani-Miller theorem, X-DOI: 10.1080/1016873042000228349 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000228349 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2004:i:2:p:215-236 Template-Type: ReDIF-Article 1.0 Author-Name: Harald Battermann Author-X-Name-First: Harald Author-X-Name-Last: Battermann Author-Name: Udo Broll Author-X-Name-First: Udo Author-X-Name-Last: Broll Title: Price uncertainty, future markets and correlation Abstract: This paper examines the optimal trade and hedging decisions of a competitive exporting firm which faces concurrently hedgeable exchange rate risk and non-hedgeable inflation risk. The macroeconomic interaction between exchange rate and domestic inflation rate risk is described by a state variable. The (strong) correlation is pivotal in determining the optimal risk management. It is shown how optimal hedging strategies are affected by state-dependent preferences of the firm. The optimal hedge policy is to minimize the variation of marginal utility of final wealth across states of nature instead of minimizing the variance of final wealth. Journal: International Economic Journal Pages: 237-243 Issue: 2 Volume: 18 Year: 2004 Keywords: Exchange rate risk, inflation risk, state-dependent preferences, hedging, strong correlation, X-DOI: 10.1080/1016873042000228358 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000228358 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2004:i:2:p:237-243 Template-Type: ReDIF-Article 1.0 Author-Name: Song-Zan Chiou Wei Author-X-Name-First: Song-Zan Chiou Author-X-Name-Last: Wei Author-Name: Zhen Zhu Author-X-Name-First: Zhen Author-X-Name-Last: Zhu Title: Equality of interest rates revisited: the multi-country evidence Abstract: One influential aspect of international integration of financial markets is the possibility of reducing divergences between domestic interest rates and foreign interest rates or increasing the degree to which yields in different financial markets move together over time. In this study, we investigate the convergence of the real interest rates using the Kalman filter. Applying the modified Hall et al. (1997) approach, we model the risk premium and convergence of real interest rates using the time-varying parameter estimation techniques. We present evidence of risk premium and convergence for two blocks of countries—The Asian-Pacific countries including the US, Japan, Taiwan and South Korea and the US-European group including France, the UK, Germany and the US. Journal: International Economic Journal Pages: 245-257 Issue: 2 Volume: 18 Year: 2004 Keywords: Financial market integration, real interest rates, Kalman filter, X-DOI: 10.1080/1016873042000228367 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000228367 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2004:i:2:p:245-257 Template-Type: ReDIF-Article 1.0 Author-Name: Augustine Arize Author-X-Name-First: Augustine Author-X-Name-Last: Arize Author-Name: John Malindretos Author-X-Name-First: John Author-X-Name-Last: Malindretos Author-Name: Elias Grivoyannis Author-X-Name-First: Elias Author-X-Name-Last: Grivoyannis Title: Foreign exchange reserves and import demand in a developing economy: the case of Pakistan Abstract: Conventional specifications of import demand in LDCs have commonly been plagued by implausible and unstable parameter estimates. This paper shows the importance of imposing long-run income homogeneity and of including foreign exchange reserves when estimating import demand function for an LDC. Using several cointegration techniques, it is shown that there is one linear relationship among real imports, real income, relative import prices and real foreign exchange reserves. In addition, by employing stability tests for cointegrated systems by Hansen (1992a), the paper shows that only when foreign exchange reserves and long-run unit-income homogeneity are accounted for does a constant parameter, long-run equilibrium relation emerge for Pakistan. Also, the ensuing short-run dynamic model is constant and data-coherent. Finally, the study provides information on the speed of adjustment to equilibrium and the median and mean time lags of adjustments of real imports to changes in their determinants. The results indicate a quick response of real imports to changes in their determinants. Journal: International Economic Journal Pages: 259-274 Issue: 2 Volume: 18 Year: 2004 Keywords: Foreign exchange-reserves, import demand, cointegration, X-DOI: 10.1080/1016873042000228376 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000228376 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2004:i:2:p:259-274 Template-Type: ReDIF-Article 1.0 Author-Name: Shekar Bose Author-X-Name-First: Shekar Author-X-Name-Last: Bose Title: Price volatility of south-east fishery's quota species: an empirical analysis Abstract: This study investigates the autoregressive conditional heteroscedasticity (ARCH) and generalized-ARCH (GARCH) effects in the price series of Australian South-East Fishery's quota species. It is found that in all cases significant ARCH and/or GARCH effects are present. To search for the origins of these effects a weakly exogenous variable (trading volume) is introduced to the conditional variance equation of the ARCH and GARCH models, provided that such effects are observed in the first stage of investigation. It is found that in 14 cases the estimated coefficients of the trading volume are negative. In all cases, the 'trading volume' variable does not contribute to the removal of the ARCH and/or GARCH effects. Finally, the policy implications of the findings are discussed. Journal: International Economic Journal Pages: 283-297 Issue: 3 Volume: 18 Year: 2001 Keywords: JEL Classification: C3, D4, D8, Q0, Price volatility, Sydney fish market, South-east fishery, Australia, X-DOI: 10.1080/1016873042000269966 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000269966 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2001:i:3:p:283-297 Template-Type: ReDIF-Article 1.0 Author-Name: Begona Eguia Author-X-Name-First: Begona Author-X-Name-Last: Eguia Author-Name: Cruz Echevarria Author-X-Name-First: Cruz Author-X-Name-Last: Echevarria Title: Population age structure and private consumption in Spain Abstract: In this paper we study the effect of population age distribution upon private consumption expenditure in Spain from 1964 to 1997 using aggregate data. We obtain four main results. First, changes in the population pyramid have substantial effects upon the behaviour of private consumption. Second, the pattern of the coefficients of the demographic variables is not consistent with the simplest version of the life cycle hypothesis. Third, we estimate the impact of the demographic transition upon consumption and find positive values associated with episodes in which the shares of groups of individuals with expenditure levels higher (lower) than the mean increased (decreased). Fourth, the results are robust to alternative specifications for the population age distribution. Journal: International Economic Journal Pages: 299-319 Issue: 3 Volume: 18 Year: 2001 Keywords: JEL Classification: E20, J19, Aggregate data, demographic heterogeneity, age, consumption, X-DOI: 10.1080/1016873042000269975 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000269975 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2001:i:3:p:299-319 Template-Type: ReDIF-Article 1.0 Author-Name: Fuhmei Wang Author-X-Name-First: Fuhmei Author-X-Name-Last: Wang Title: Insulation properties of separating exchange markets Abstract: Insulation properties play an important role for countries in favour of separating rates for separating transactions. Such properties insulate the open economy from monetary and real shocks, of domestic and foreign origins. Through theoretical and numerical analyses, we find that in a unified flexible exchange rate system, portfolio holders' expectations drive the price adjustment, leading to expectations of exchange rate changes. In separating exchange markets, the financial rate reflects the instability of portfolio holders' expectations and capital flows; however, the real exchange rate and hence the macroeconomy is stable. Uncertainty of shocks ceases to affect the real sector of the economy. Journal: International Economic Journal Pages: 321-335 Issue: 3 Volume: 18 Year: 2001 Keywords: JEL Classification: F310, F410, Insulation properties, separating exchange markets, X-DOI: 10.1080/1016873042000269984 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000269984 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2001:i:3:p:321-335 Template-Type: ReDIF-Article 1.0 Author-Name: Lai Yew Wah Author-X-Name-First: Lai Yew Author-X-Name-Last: Wah Title: The role of domestic demand in the economic growth of Malaysia: a cointegration analysis Abstract: For the past four decades (1961-2000), the Malaysian economy grew at an impressive average rate of 6.8% per annum. The rapid growth has been attributed, in part, to the tremendous success in the export-oriented industrialization policy. Several empirical studies on export-led growth for Malaysia have, however, led to inconclusive and mixed results. This may be due to the exclusion of domestic demand in the bivariate or multivariate models used in the studies. This study re-examines the role of domestic demand in economic growth in Malaysia. Using a three-variable cointegration analysis, the study shows that there exist short run bilateral causalities among the three variables, which implies that both the export-led growth and domestic demand-generated growth hypotheses are at least valid in the short run. On the other hand, the results are not supportive of the export-led growth hypothesis in the long run. Instead, the highly significant positive impact of domestic expenditure on economic growth implies that use of domestic demand as the catalyst for growth is appropriate. Journal: International Economic Journal Pages: 337-352 Issue: 3 Volume: 18 Year: 2001 Keywords: JEL Classification: F43, Domestic demand, economic growth, cointegration, X-DOI: 10.1080/1016873042000269993 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000269993 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2001:i:3:p:337-352 Template-Type: ReDIF-Article 1.0 Author-Name: In Kwon Lee Author-X-Name-First: In Kwon Author-X-Name-Last: Lee Title: Determinants of cyclical properties of the price-cost margin in US manufacturing industries Abstract: Supergame theoretical predictions tell that oligopoly pricing may be procyclical or counter-cyclical. Industry by industry analysis shows that the speed of industry growth and the size of fixed cost are crucial in distinguishing characteristically counter-cyclical industries from procyclical industries. Counter-cyclical industries are characterized by high growth of demand and low fixed costs. Procyclical industries are characterized by low growth of demand and high fixed costs. Journal: International Economic Journal Pages: 353-364 Issue: 3 Volume: 18 Year: 2001 Keywords: JEL Classification: C72, L11, L60, Procyclical industries, counter-cyclical industries, price-cost margin, growth rate of demand, fixed cost, X-DOI: 10.1080/1016873042000270009 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000270009 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2001:i:3:p:353-364 Template-Type: ReDIF-Article 1.0 Author-Name: Tarun Kabiraj Author-X-Name-First: Tarun Author-X-Name-Last: Kabiraj Author-Name: Ching Chyi Lee Author-X-Name-First: Ching Chyi Author-X-Name-Last: Lee Title: Synergy, learning and the changing industrial structure Abstract: In a set-up of two local firms and one foreign firm, we construct a model to capture the dynamics of local industrial structure induced by formation and breakdown of cross-border joint ventures (JVs). There is a synergic gain to the JV, and the partners learn from each other. Firms play a repeated game. We characterize the resulting industrial configurations under different scenarios as defined by the extent of cost saving. In particular, we show that when cost saving is moderate, an alliance formed between two firms in the first period, breaks up and a new alliance is formed in the second period, but again it breaks up; thereafter the market becomes an oligopoly of all three firms. Journal: International Economic Journal Pages: 365-387 Issue: 3 Volume: 18 Year: 2001 Keywords: JEL Classification: F23, L13, O33, Synergy, learning, joint venture, subsidiary, industry structure, X-DOI: 10.1080/1016873042000270018 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000270018 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2001:i:3:p:365-387 Template-Type: ReDIF-Article 1.0 Author-Name: Ahmad Zubaidi Baharumshah Author-X-Name-First: Ahmad Zubaidi Author-X-Name-Last: Baharumshah Title: Stock prices and long-run demand for money: evidence from Malaysia Abstract: This paper investigates the money demand function for Malaysia in the 1971-1996 period using the multivariate cointegration and error correction model methodology. The results suggest that a stable long-run relationship exist between real M2, the interest rate differential, income and stock prices. Stock prices have a significant negative substitute effect on long-run as well as short-run broad-money demand (M2) and its omission can lead to serious misspecification in the money demand function. The analysis from the vector error correction model (VECM) and the Toda & Yamamoto (1995) causality tests find that money is endogenous and that there is at least a unidirectional relationship between stock prices and real M2. Stock prices Granger cause real M2 indirectly through income between interest rates and stock prices and stock prices and money stock. This paper comes to the conclusion that due to the endogeneity of money, M2 cannot be completely controlled by Malaysia's central bank. Therefore, in formulating future monetary policy, the response of money demand to stock prices should be considered. Journal: International Economic Journal Pages: 389-407 Issue: 3 Volume: 18 Year: 2001 Keywords: JEL Classification: E41, E44, Money demand, cointegration, exogeneity, causality, X-DOI: 10.1080/1016873042000270027 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000270027 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2001:i:3:p:389-407 Template-Type: ReDIF-Article 1.0 Author-Name: Hyung Bae Author-X-Name-First: Hyung Author-X-Name-Last: Bae Title: Limited liability effect on product safety Abstract: This paper analyses how limited liability and capital size affect a firm's investment for product safety. Firms become bankrupt when their products cause accidents and they cannot compensate for the damages incurred. Relatively small firms obtain greater expected profit because they do not need to pay full damage when their products cause accidents and they become bankrupt. Thus, smaller firms may have greater incentives than larger firms to participate in risky projects. But relatively small firms may invest more for product safety because increasing their investments is not costly in case of bankruptcy. Journal: International Economic Journal Pages: 409-417 Issue: 3 Volume: 18 Year: 2001 Keywords: JEL Classification: D21, Limited liability, product safety, X-DOI: 10.1080/1016873042000275752 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000275752 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2001:i:3:p:409-417 Template-Type: ReDIF-Article 1.0 Author-Name: David McKenzie Author-X-Name-First: David Author-X-Name-Last: McKenzie Title: An Econometric analysis of IBRD creditworthiness Abstract: This paper finds that one can econometrically ascertain the determinants of default to the International Bank for Reconstruction and Development (IBRD) through panel logit analysis. Creditworthiness is found to be determined by political and external factors in addition to economic variables. Default to the IBRD is seen to fall into a graduated hierarchy of default, whereby default occurs first to Paris Club and Commercial Bank creditors, with subsequent default to the IBRD being triggered by a high proportion of IBRD and short-term debt in the portfolio and other economic and political factors. Journal: International Economic Journal Pages: 427-448 Issue: 4 Volume: 18 Year: 2001 Keywords: Sovereign default, creditworthiness, international lenders, JEL Classification: F34, G15, G29, X-DOI: 10.1080/1016873042000299927 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000299927 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2001:i:4:p:427-448 Template-Type: ReDIF-Article 1.0 Author-Name: Gwanghoon Lee Author-X-Name-First: Gwanghoon Author-X-Name-Last: Lee Title: The quality of human capital, educational reform and economic growth Abstract: Using a general equilibrium growth model with a costly schooling process, this paper analyses the effect on economic growth of educational reform that allocates more resources to the schooling sector to raise the quality of human capital. It shows that the positive effect of improved quality on the economic growth could be offset by the reverse effect of reduced human capital formation that arises from the distortion of resource reallocation. An appropriate tax-subsidy scheme is shown to remove this reverse effect of educational reform. Journal: International Economic Journal Pages: 449-465 Issue: 4 Volume: 18 Year: 2001 Keywords: Human capital, resource allocation, economic development, JEL Classification: O12, O41, I28, X-DOI: 10.1080/1016873042000299936 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000299936 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2001:i:4:p:449-465 Template-Type: ReDIF-Article 1.0 Author-Name: Salah Nusair Author-X-Name-First: Salah Author-X-Name-Last: Nusair Title: Testing for PPP in developing countries using confirmatory analysis and different base countries: an application to Asian countries Abstract: Previous studies on PPP have tested either the null hypothesis of non-stationary or the null of a stationary real exchange rate and used the US as the base country and focused on industrialized countries. It has been argued that testing either null is insufficient to confirm the presence of PPP. It has also been noticed that the results are sensitive to the choices of the base country; for instance, the US versus Germany. In contrast to previous studies, this paper uses different unit root tests, confirmatory analysis, and different base countries to test PPP for a sample of developing countries in Asia during the current float. Overall, the results do not seem to be sensitive to the choice of the base country, and joint rejections are not present but joint non-rejections are far more common. Using Perron's test, which allows for a one-time break in the series, the results indicate evidence of stationarity for Indonesia, Korea, Malaysia and Thailand when the US is the base country. When Japan is the base country, evidence of stationarity is detected only for Indonesia. Journal: International Economic Journal Pages: 467-489 Issue: 4 Volume: 18 Year: 2001 Keywords: PPP, the ADF test, the PP test, the ADF-GLS test, the KPSS test, structural break, JEL Classification: F31, F41, C12, X-DOI: 10.1080/1016873042000299945 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000299945 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2001:i:4:p:467-489 Template-Type: ReDIF-Article 1.0 Author-Name: Choong-Young Jung Author-X-Name-First: Choong-Young Author-X-Name-Last: Jung Title: An incentive pricing with two types of qualities and users Abstract: This paper analyses quality discrimination when the monopolist provides two types of qualities for two-types of users, for example, in the software market. The users using software are confronted with two types of quality in using the software: one is related to learning, while the other is operation. In addition, the users are discriminated by the frequency of utilization for software, for example, low-demand and high-demand users. In this paper, the characteristics for bi-directional quality distortion in both learning quality and operation quality are analysed. It is shown that the distortion can occur both for low demanders and for high demanders. Finally, from public policy, a subsidy mechanism is introduced. Journal: International Economic Journal Pages: 491-504 Issue: 4 Volume: 18 Year: 2001 Keywords: Quality distortion, operation quality, learning quality, subsidy, JEL Classification: D4, D5, D8, L1, X-DOI: 10.1080/1016873042000299954 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000299954 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2001:i:4:p:491-504 Template-Type: ReDIF-Article 1.0 Author-Name: Tapan Biswas Author-X-Name-First: Tapan Author-X-Name-Last: Biswas Author-Name: Jolian McHardy Author-X-Name-First: Jolian Author-X-Name-Last: McHardy Title: On the intensity and balance of intra-European migration Abstract: This paper seeks to examine changes in the balance of intra-European migration during the years 1985-99. We construct two indices for measuring intra-European migration between each member state and the rest of the EU15. Non-parametric tests indicate that there is a close and increasing relationship between real GDP per capita and the pattern of net migration within Europe. Further, statistical tests suggest that, on the whole, intra-European migration has actually become more balanced after the implementation of the Schengen agreement in 1995. A Chow test also reveals that 1995 is the break-year after which levels of intra-European migration shifted upwards. Journal: International Economic Journal Pages: 505-520 Issue: 4 Volume: 18 Year: 2001 Keywords: Migration, Europe, Schengen Agreement, JEL Classification: F22, J61, O52, X-DOI: 10.1080/1016873042000299963 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000299963 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2001:i:4:p:505-520 Template-Type: ReDIF-Article 1.0 Author-Name: Yongseung Jung Author-X-Name-First: Yongseung Author-X-Name-Last: Jung Title: Liquidity effects and habit formation in a sticky price model Abstract: This paper sets up a sticky price model with external habit formations. It shows that the cross-correlation between output and interest rates as well as prices match the data well when there is habit formation. Consumption as well as output display a hump-shaped response to a positive monetary shock when there is habit formation. The paper also shows that the sticky price model with Abel's (1990, 1999) external habit formation succeeds in generating liquidity effects. Journal: International Economic Journal Pages: 521-546 Issue: 4 Volume: 18 Year: 2001 Keywords: Habit formation, leading indicator, monetary policy, sticky price, JEL Classification: E31, E52, X-DOI: 10.1080/1016873042000299972 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000299972 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2001:i:4:p:521-546 Template-Type: ReDIF-Article 1.0 Author-Name: Nikolaos Dritsakis Author-X-Name-First: Nikolaos Author-X-Name-Last: Dritsakis Author-Name: Antonios Adamopoulos Author-X-Name-First: Antonios Author-X-Name-Last: Adamopoulos Title: Financial development and economic growth in Greece: an empirical investigation with Granger causality analysis Abstract: This paper empirically examines the causal relationship between the degree of openness of the economy, financial development and economic growth by using a multivariate autoregressive VAR model in Greece for the examined period 1960:I-2000:IV. The results of cointegration analysis suggest that there is one cointegrated vector among GDP, financial development and the degree of openness of the economy. Granger causality tests based on error correction models show that there is a causal relationship between financial development and economic growth, but also between the degree of openness of the economy and economic growth. Journal: International Economic Journal Pages: 547-559 Issue: 4 Volume: 18 Year: 2001 Keywords: Financial development, economic growth, openness, Granger causality, X-DOI: 10.1080/1016873042000299981 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000299981 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2001:i:4:p:547-559 Template-Type: ReDIF-Article 1.0 Author-Name: Jin Hwa Jung Author-X-Name-First: Jin Hwa Author-X-Name-Last: Jung Author-Name: Kang-Shik Choi Author-X-Name-First: Kang-Shik Author-X-Name-Last: Choi Title: Gender wage differentials and discrimination in Korea: comparison by knowledge intensity of industries Abstract: This study estimates the relative size of the non-productivity-related gender wage gap across industries with differing knowledge intensities. More specifically, a gender wage premium was estimated from a modified Mincerian earnings equation, and an Oaxaca's discrimination coefficient was computed. Empirical evidence indicates that gender wage differentials tend to be less subject to potential discrimination in knowledge-based industries than in other industries with lower knowledge intensity. The estimated discrimination effect is least noticeable in top hierarchical occupations such as professionals and technicians, while it is most sizeable in production workers and sales/service workers, regardless of industrial affiliation. Journal: International Economic Journal Pages: 561-579 Issue: 4 Volume: 18 Year: 2001 Keywords: Wage differentials, discrimination, knowledge intensity, Korea JEL Classification: J31, J71, X-DOI: 10.1080/1016873042000299990 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1016873042000299990 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:18:y:2001:i:4:p:561-579 Template-Type: ReDIF-Article 1.0 Author-Name: Richard Beil Author-X-Name-First: Richard Author-X-Name-Last: Beil Author-Name: George Ford Author-X-Name-First: George Author-X-Name-Last: Ford Author-Name: John Jackson Author-X-Name-First: John Author-X-Name-Last: Jackson Title: On the relationship between telecommunications investment and economic growth in the United States Abstract: Using a time series of 50 years, the relationships between investment by telecommunications firms and Gross Domestic Product in the United States are examined. Granger-Sims causality tests are conducted, with proper allowance for both the non-stationarity of the data and lag length. These tests indicate that investment by telecommunications firms is caused by, but does not cause, economic activity, and the findings are robust across lag lengths. The evidence suggests that policies aimed at stimulating the US economy by accelerating investment by telecommunications firms may not be successful. Journal: International Economic Journal Pages: 3-9 Issue: 1 Volume: 19 Year: 2005 Keywords: Telecommunications, growth, Granger causality, X-DOI: 10.1080/1351161042000320399 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1351161042000320399 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:1:p:3-9 Template-Type: ReDIF-Article 1.0 Author-Name: Yutaka Suzuki Author-X-Name-First: Yutaka Author-X-Name-Last: Suzuki Title: Integration versus non-integration: specific investments and ex-post resource distribution Abstract: I adopt a non-cooperative game theoretic approach to an incomplete contracting transaction model, a la Grossman & Hart (1986), Hart & Moore (1990) and Bolton & Whinston (1993), consisting of one upstream firm and two downstream firms. When the downstream firms need to make relation-specific investments, they can increase their ex-post bargaining position by vertically integrating ex-ante with the upstream firm with an essential asset. By introducing an explicit mechanism, bidding, which the firms can use to transfer the control right of the upstream asset, I compare the regimes of vertical integration (ex-ante) with ex-post renegotiation and non-integration, analyse equilibrium investment incentives, and show that vertical integration will evolve under certain conditions. Journal: International Economic Journal Pages: 11-35 Issue: 1 Volume: 19 Year: 2005 Keywords: Integration versus non-integration, asset ownership, specific investment, bidding, alternating-offer bargaining games with breakdown probability, X-DOI: 10.1080/1351161042000320434 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1351161042000320434 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:1:p:11-35 Template-Type: ReDIF-Article 1.0 Author-Name: Sunku Hahn Author-X-Name-First: Sunku Author-X-Name-Last: Hahn Title: Pricing of a new product with consumer learning Abstract: Sometimes firms sell their products only for a limited time. This phenomenon can be interpreted as the firms' strategy to increase their profits by prohibiting consumers from learning their personal values of the product as time passes. This explanation can also be used to explain the firms' strategy to set low prices on their new products for only a limited time. Journal: International Economic Journal Pages: 37-49 Issue: 1 Volume: 19 Year: 2005 Keywords: Deadline of purchase, consumer learning, increasing price, X-DOI: 10.1080/1351161042000320362 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1351161042000320362 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:1:p:37-49 Template-Type: ReDIF-Article 1.0 Author-Name: Inci Parlaktuna Author-X-Name-First: Inci Author-X-Name-Last: Parlaktuna Title: Exchange market pressure in Turkey 1993-2004: an application of the girton-roper monetary model Abstract: In this paper, Lance Girton & Don Roper's (1977) monetary model of Exchange Market Pressure (EMP) is applied to the Turkish economy in the period of 1993-2004. The results provide strong evidence of negative relation between domestic credit and exchange market pressure (EMP) and indicate that the Central Bank of the Republic of Turkey (TCMB) absorbed most of the exchange market pressure by adjusting the foreign reserves. Journal: International Economic Journal Pages: 51-62 Issue: 1 Volume: 19 Year: 2005 Keywords: Exchange market pressure, exchange market intervention, monetary approach to Balance of Payments (BOP) and to exchange rate determination, X-DOI: 10.1080/1351161042000320371 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1351161042000320371 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:1:p:51-62 Template-Type: ReDIF-Article 1.0 Author-Name: Ahmed Asseery Author-X-Name-First: Ahmed Author-X-Name-Last: Asseery Title: Evidence of non-linearities in the bilateral real exchange rates of the British pound Abstract: Using the UK as the base country, this study investigates the nature of the inherent non-stationarity of the major bilateral real exchange rates for the post Bretton Woods era. Non-linearity is shown to be pervasive in both the changes in the real exchange rates and the residuals of the ADF model. The study proposes that misalignments of nominal exchange rates may work as signals in the export market and the financial market. The study, intuitively, argues that the dynamic motions of misalignments cause confusion to exporters as they take it as price changing positions by their foreign competitors, to the extent that exporters find it easier in some situations to resort to habits or routines in setting up their international prices rather than to attempts at optimization to reach a Stackelberg price position. The study uses a non-linear three-regime SETAR model as a parsimonious representation of this asymmetric pricing behaviour. Fluctuations in a bilateral real exchange rate, in excess and beyond fluctuations in relative prices, which give rise to non-linearity in the second moment of real exchange rate, are attributed to the dynamic motions of speculation on the nominal exchange rate in the financial market triggered continuously by signals of misalignments. This non-linearity is proved to be non-detectable but a second-generation SETAR-IGARCH model seems to be capable of capturing this type of non-linearity, implying that signals in the financial market are fully anticipated by rational agents. Journal: International Economic Journal Pages: 63-90 Issue: 1 Volume: 19 Year: 2005 Keywords: Bilateral real exchange rate, SETAR-IGARCH, pricing-to-market, non-linearity, Stackelberg price position, BDS test, X-DOI: 10.1080/1351161042000320380 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1351161042000320380 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:1:p:63-90 Template-Type: ReDIF-Article 1.0 Author-Name: Hyung Bae Author-X-Name-First: Hyung Author-X-Name-Last: Bae Title: Impact of labour unions on the merger incentive of firms Abstract: This paper analyses the impact of labour unions on the merger incentives of firms. We find that a horizontal merger takes place if there is some synergy effect. However, a vertical merger takes place only if the synergy effect is bigger than a certain size. Journal: International Economic Journal Pages: 91-94 Issue: 1 Volume: 19 Year: 2005 Keywords: Merger (horizontal, vertical), union, Shapley value, X-DOI: 10.1080/1351161042000320407 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1351161042000320407 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:1:p:91-94 Template-Type: ReDIF-Article 1.0 Author-Name: Winston Chang Author-X-Name-First: Winston Author-X-Name-Last: Chang Author-Name: Hajime Sugeta Author-X-Name-First: Hajime Author-X-Name-Last: Sugeta Title: Cost asymmetry, oligopolistic competition and optimal trade and industrial policies Abstract: Optimal trade and industrial policies are examined in an export-rivalry and a home-market model with general cost heterogeneity among firms. The roles of the demand and cost structures in policy determination are systematically analysed. It is shown that the equal-markup property holds in both models under the firm-specific industrial policy. A more efficient firm has a higher subsidy or a lower tax rate than an inefficient one. In the home market model under free trade, the firm-specific industrial policy always calls for subsidies to all home firms. Under the firm-specific trade policy, it is shown that the difference between any two tariff rates exactly equals 100% of the difference between the foreign firms' marginal costs, the home industry is always granted some positive level of protection, and a production-tax-cum-import-subsidy policy is never optimal. Journal: International Economic Journal Pages: 95-114 Issue: 1 Volume: 19 Year: 2005 Keywords: Cost asymmetry, trade and industrial policies, X-DOI: 10.1080/1351161042000320416 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1351161042000320416 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:1:p:95-114 Template-Type: ReDIF-Article 1.0 Author-Name: Moawia Alghalith Author-X-Name-First: Moawia Author-X-Name-Last: Alghalith Title: Input demand with cost uncertainty Abstract: We simultaneously extend the models developed by Stewart, Paroush & Wolf, and Viaene & Zilcha. That is, allowing output to adjust and using a general utility, general distributions and a two-variable-input production function, we show the impact of the cost risk and increasing risk aversion on each input demand, output, input productivity (marginal and average), and the inputs ratio. Journal: International Economic Journal Pages: 115-123 Issue: 1 Volume: 19 Year: 2005 Keywords: Cost uncertainty, input price uncertainty, risk aversion, utility, X-DOI: 10.1080/1351161042000320425 File-URL: http://www.tandfonline.com/doi/abs/10.1080/1351161042000320425 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:1:p:115-123 Template-Type: ReDIF-Article 1.0 Author-Name: John Heywood Author-X-Name-First: John Author-X-Name-Last: Heywood Author-Name: Sunwoong Kim Author-X-Name-First: Sunwoong Author-X-Name-Last: Kim Title: Editors' introduction Abstract: Journal: International Economic Journal Pages: 125-128 Issue: 2 Volume: 19 Year: 2005 X-DOI: 10.1080/10168730500080774 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500080774 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:2:p:125-128 Template-Type: ReDIF-Article 1.0 Author-Name: Richard Freeman Author-X-Name-First: Richard Author-X-Name-Last: Freeman Title: Labour market institutions without blinders: The debate over flexibility and labour market performance Abstract: The debate over the influence of labour market flexibility on performance is unlikely to be settled by additional studies using aggregate data and making cross-country comparisons. While this approach holds little promise, micro-analysis of workers and firms and increased use of experimental methods represent a path forward. Steps along this path could help end the current 'lawyer's case' empiricism in which priors dominate evidence. Journal: International Economic Journal Pages: 129-145 Issue: 2 Volume: 19 Year: 2005 Keywords: Flexibility, performance, aggregate data, X-DOI: 10.1080/10168730500080675 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500080675 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:2:p:129-145 Template-Type: ReDIF-Article 1.0 Author-Name: David Ellerman Author-X-Name-First: David Author-X-Name-Last: Ellerman Title: The two institutional logics: exit-oriented versus commitment-oriented institutional designs Abstract: Throughout human affairs there are two dual logics. Albert Hirschman investigated the two logics as the parallel-oriented logic of exit and the series-oriented logic of commitment, loyalty, and voice. Economics focuses almost exclusively on the logic of exit and questions of institutional design are seen through that lens. One goal here is to flesh out the alternative commitment-oriented logic of institutional design. The large Japanese-style firm is a major example of the commitment-oriented institutional design. Another point is that each logic has an internal consistency so some 'mix and match' hybrids can be more lethal than vigorous. In the East Asian crisis, highly leveraged firms from a commitment-oriented system of relational finance had 'taken advantage' of the new funds available from globalized financiers operating under the exit-oriented logic of arms-length finance - and the hybrid proved to be unviable. Overall, my goal is to illustrate the two institutional logics that offer two different and often incompatible ways to approach questions of flexibility, performance, and efficiency. Journal: International Economic Journal Pages: 147-168 Issue: 2 Volume: 19 Year: 2005 Keywords: Exit, voice, commitment, lethal hybrids, X-DOI: 10.1080/10168730500080642 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500080642 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:2:p:147-168 Template-Type: ReDIF-Article 1.0 Author-Name: Lei Delsen Author-X-Name-First: Lei Author-X-Name-Last: Delsen Author-Name: Erik Poutsma Author-X-Name-First: Erik Author-X-Name-Last: Poutsma Title: Labour market institutions and economic performance in the Netherlands Abstract: The central question of this article is whether or not effectiveness and efficiency are improved by the stronger reliance on markets given Dutch labour market institutions and their resulting corporatist wage formation. In answering this question, besides the influence on the production costs (neoclassical approach), we explicitly deal with and quantify the 'hidden' transaction costs (institutional economics approach) of more decentralized labour relations, flexibilization of the labour market, and working conditions 'a la carte'. The results presented cast doubt on both the efficiency and the effectiveness of recently introduced tailor-made solutions in the Dutch economy. Journal: International Economic Journal Pages: 169-196 Issue: 2 Volume: 19 Year: 2005 Keywords: Corporatism, economic performance, Netherlands, transaction costs, X-DOI: 10.1080/10168730500080576 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500080576 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:2:p:169-196 Template-Type: ReDIF-Article 1.0 Author-Name: Kirsten Daniel Author-X-Name-First: Kirsten Author-X-Name-Last: Daniel Author-Name: W. S. Siebert Author-X-Name-First: W. S. Author-X-Name-Last: Siebert Title: Does employment protection reduce the demand for unskilled labour? Abstract: We propose a model in which workers with little education or in the tails of the age distribution - the inexperienced and the old - have more chance of job failure (mismatch). Recruits' average education should then increase and the standard deviation of starting age decrease when strict employment protection raises hiring and firing costs. We test the model using annual distributions of recruits' characteristics from a 1975-1995 panel of plants in Belgium, the Netherlands, Italy, the UK and the US. The model's predictions are supported using the Blanchard-Wolfers index of employment protection as well as our alternative index. Journal: International Economic Journal Pages: 197-222 Issue: 2 Volume: 19 Year: 2005 Keywords: Employment protection, labour demand, unskilled workers, firm panel data, X-DOI: 10.1080/10168730500080998 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500080998 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:2:p:197-222 Template-Type: ReDIF-Article 1.0 Author-Name: Injae Lee Author-X-Name-First: Injae Author-X-Name-Last: Lee Author-Name: Dong-bae Kim Author-X-Name-First: Dong-bae Author-X-Name-Last: Kim Title: Unions and the use of flexible staffing in korea: evidence from an establishment survey Abstract: Using data from the KLI Workplace Survey 2002, this study investigates the effects of unions on the use of flexible staffing arrangements. We find that union representation is positively associated with the employer's use of more flexible forms of employment. This union effect cannot be attributed to the unobserved characteristics of unionized establishments, which may promote the intensive use of flexible staffing arrangements. Our findings cast doubt on the claim that the union effect is a statistical artefact arising from a sorting process in which firms with higher propensities to use flexible staffing arrangements are more likely to be unionized. Journal: International Economic Journal Pages: 223-234 Issue: 2 Volume: 19 Year: 2005 Keywords: Flexible staffing arrangement, union, endogeneity bias, X-DOI: 10.1080/10168730500080964 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500080964 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:2:p:223-234 Template-Type: ReDIF-Article 1.0 Author-Name: John Heywood Author-X-Name-First: John Author-X-Name-Last: Heywood Author-Name: Uwe Jirjahn Author-X-Name-First: Uwe Author-X-Name-Last: Jirjahn Author-Name: Georgi Tsertsvadze Author-X-Name-First: Georgi Author-X-Name-Last: Tsertsvadze Title: Does profit sharing reduce conflict with the boss? Evidence from Germany Abstract: This paper argues that, in general, profit sharing aligns the interests of workers and the firm and that this alignment reduces the extent of conflict between workers and management. This paper also argues that this general result will not carry over to the workers least able to respond to the alignment of interests with greater effort and that it will not apply to supervisors. After describing the German use of profit sharing, we use German data to show that for non-supervisory workers in excellent health, profit sharing reduces conflict but that for those who are not in excellent health and for supervisors, profit sharing does not reduce conflict. We also show that independent from profit sharing, conflict with the boss is greater for the aged and for those not in excellent health. Journal: International Economic Journal Pages: 235-250 Issue: 2 Volume: 19 Year: 2005 Keywords: Profit sharing, mutual monitoring, cooperation, supervisor, health, X-DOI: 10.1080/10168730500080741 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500080741 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:2:p:235-250 Template-Type: ReDIF-Article 1.0 Author-Name: Takao Kato Author-X-Name-First: Takao Author-X-Name-Last: Kato Author-Name: Ju HO Lee Author-X-Name-First: Ju HO Author-X-Name-Last: Lee Author-Name: Kang-sung Lee Author-X-Name-First: Kang-sung Author-X-Name-Last: Lee Author-Name: Jang-soo Ryu Author-X-Name-First: Jang-soo Author-X-Name-Last: Ryu Title: Employee participation and involvement in korea: evidence from a new survey and field research Abstract: This paper provides evidence on the incidence, scope and nature of employee participation in Korea. The key findings include: (i) the incidence of works councils (WCs) is higher than in most other countries; (ii) not all WCs are functioning well with a little less than 70% of Korean firms having functioning WCs; (iii) WCs may be a substitute for traditional collective bargaining; (iv) there are complementarities between EI (Employee Involvement) programmes and trade unions (especially FKTU-affiliated unions); between EI programmes and training; and between representative participation at the top and direct participation at the shopfloor; (v) there is evidence of dysfunctional and weak quality circles; and (vi) consistent with our hypotheses, firms with EI programmes (especially effective EI programmes) are generally larger, more capital intensive, spend more on training and more productive than other firms. Finally, we use qualitative data from two large manufacturing firms to explore further the use of employee participation and involvement programmes in Korea. Journal: International Economic Journal Pages: 251-281 Issue: 2 Volume: 19 Year: 2005 Keywords: Employee participation, works councils, quality circles, X-DOI: 10.1080/10168730500080923 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500080923 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:2:p:251-281 Template-Type: ReDIF-Article 1.0 Author-Name: Joonmo Cho Author-X-Name-First: Joonmo Author-X-Name-Last: Cho Author-Name: Sunwoong Kim Author-X-Name-First: Sunwoong Author-X-Name-Last: Kim Title: On using mandatory retirement to reduce workforce in korea Abstract: Since the financial crisis in 1998, many Korean corporations with low profitability and excessive liabilities cut operating costs. They had to deal with exorbitant wage increases that outpaced productivity and were generated by the traditional seniority-based wage system. The empirical analysis of this study suggests that those companies with many long tenure workers under the Japanese-style personnel management system are more likely to utilize mandatory retirement in order to adjust employment. Moreover, blue-collar jobs are more likely to be associated with mandatory retirement. This suggests that the labour unions may tacitly approve of this practice. Journal: International Economic Journal Pages: 283-303 Issue: 2 Volume: 19 Year: 2005 Keywords: Mandatory retirement, employment adjustment, labour cost, labour union, X-DOI: 10.1080/10168730500080550 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500080550 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:2:p:283-303 Template-Type: ReDIF-Article 1.0 Author-Name: Alejandra Cox Edwards Author-X-Name-First: Alejandra Cox Author-X-Name-Last: Edwards Title: Pension reforms and employment Abstract: The Chilean social security reform became effective in November 1980, replacing a traditional pay-as-you-go system with a unified system based on a minimum required contribution towards an individual account. The reform lowered the combined contribution rates towards old age and disability pension and tightened the link between contributions and benefits increasing individuals' valuation of contributions. This paper offers estimates of 'money's worth' ratios for 'typical contributors' before and after reform, indicating that the post-reform money's worth of each peso of contribution increased substantially for all groups, and particularly for women. Using aggregate data on employment and output from 1960 to 2002, estimates imply that a 10% reduction in the payroll tax led to a 2% increase in employment, and to a 0.7 point expansion in labour force participation. Journal: International Economic Journal Pages: 305-319 Issue: 2 Volume: 19 Year: 2005 Keywords: Pay-as-you-go, unified system, individual account, labour force participation, X-DOI: 10.1080/10168730500080600 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500080600 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:2:p:305-319 Template-Type: ReDIF-Article 1.0 Author-Name: Xiangdong Wei Author-X-Name-First: Xiangdong Author-X-Name-Last: Wei Author-Name: Steve Russell Author-X-Name-First: Steve Author-X-Name-Last: Russell Author-Name: Robert Sandy Author-X-Name-First: Robert Author-X-Name-Last: Sandy Title: Analysing workplace safety policies in hong kong with a simulation method Abstract: Despite its impressive economic performance and high per-capita income, Hong Kong's workplace safety record lags behind leading industrial countries. This paper develops a computable equilibrium model of workplace safety in Hong Kong that predicts the changes in safety levels after substantial policy modifications. We find that accident rates would fall if workers' compensation insurance was more experience-rated or if fines for violations of the safety codes were raised. We also find that a progressive injury tax aimed at accident-prone firms would sharply lower the accident rate. In contrast, large increases in workers' compensation benefits have only a minor effect on the safety level. Journal: International Economic Journal Pages: 321-353 Issue: 2 Volume: 19 Year: 2005 Keywords: Compensating differentials, workplace safety, computable equilibrium model, X-DOI: 10.1080/10168730500080493 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500080493 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:2:p:321-353 Template-Type: ReDIF-Article 1.0 Author-Name: Alfred Guender Author-X-Name-First: Alfred Author-X-Name-Last: Guender Title: On discretion versus commitment and the role of the direct exchange rate channel in a forward-looking open economy model Abstract: This paper compares optimal monetary policy under discretion and commitment in an economy where the direct exchange rate channel is operative. The stabilization bias under discretion is shown to be weaker in an open economy relative to a closed economy. In an open economy, a 'less conservative central banker', one that attaches a smaller weight to the variance of inflation in the loss function, can be appointed to replicate the behaviour of real output that eventuates under commitment. Evaluating the social loss function under discretion and commitment, we find that the existence of a direct exchange rate channel in the Phillips Curve mitigates the pronounced differences between the two strategies in case of high persistence in the stochastic shocks. Journal: International Economic Journal Pages: 355-377 Issue: 3 Volume: 19 Year: 2005 Keywords: Exchange rate channel, commitment, discretion, stabilization bias, X-DOI: 10.1080/10168730500199657 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500199657 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:3:p:355-377 Template-Type: ReDIF-Article 1.0 Author-Name: Moise Sidiropoulos Author-X-Name-First: Moise Author-X-Name-Last: Sidiropoulos Author-Name: Jamel Trabelsi Author-X-Name-First: Jamel Author-X-Name-Last: Trabelsi Author-Name: Costas Karfakis Author-X-Name-First: Costas Author-X-Name-Last: Karfakis Title: Has the 'franc fort' exchange rate policy affected the inflationary dynamics? Theory and new evidence Abstract: This paper examines the impact of the 'franc fort' policy implemented in France from 1983 on the inflationary dynamics by means of a square root Kalman filter approach. An interesting aspect of the analysis is the evidence that the 'franc fort' exchange rate policy had a significant impact on the inflationary dynamics in France through its credibility effects. These results confirm the imported credibility hypothesis according to which the French authorities accelerated the disinflation process by importing the German monetary policy credibility through the 'hard peg' of the franc-DM exchange rate. These findings show that inflation dynamics in France began to converge significantly to that in Germany after the implementation of the 'franc fort' policy, making more credible the plan for the final transition to the euro. Moreover, this analysis may also reveal much about the nature of potential success of the current initiative of the new member countries now in the process of joining the EU and looking eventually to adopt the euro. Journal: International Economic Journal Pages: 379-395 Issue: 3 Volume: 19 Year: 2005 Keywords: Franc fort, inflationary dynamics, square root Kalman filter, X-DOI: 10.1080/10168730500199400 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500199400 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:3:p:379-395 Template-Type: ReDIF-Article 1.0 Author-Name: Shyh-fang Ueng Author-X-Name-First: Shyh-fang Author-X-Name-Last: Ueng Title: A theory of efficient coexistence Abstract: Neighbours have to coexist over an infinite horizon. Neither of them can eradicate the other or extricate him or herself from the bondage. Their respective resources regenerate themselves periodically. Hence, the capacities for production and war repeatedly recuperate from exhaustion. This paper uses a simple dynamic model to study the cooperation and conflict between two neighbours. It is shown that the way for one party to enhance its own prosperity without inducing a war with its neighbour is to collaborate on mutually beneficial projects and divide the output according to each side's contribution. Rejecting potential collaboration or dividing the joint output disproportionately risks the eruption of war. If the duration that one side is prepared to fight exceeds that of the other, the one with a shorter duration will concede defeat before the war starts. Nonetheless, when the planned durations of war of both sides are identical, the first-strike advantage induces them to wage war simultaneously. Journal: International Economic Journal Pages: 397-416 Issue: 3 Volume: 19 Year: 2005 Keywords: Neighbours, collaboration, war, division of joint output, X-DOI: 10.1080/10168730500199574 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500199574 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:3:p:397-416 Template-Type: ReDIF-Article 1.0 Author-Name: Delia Ionascu Author-X-Name-First: Delia Author-X-Name-Last: Ionascu Author-Name: Kresimir zigic Author-X-Name-First: Kresimir Author-X-Name-Last: zigic Title: Free trade versus strategic trade as a choice between two 'second best' policies: A symmetric versus asymmetric information analysis Abstract: We analyse the following policy dilemma: strategic trade policy versus free trade when the domestic government is bound to intervene only after the domestic firm's strategic variable in the form of R&D investment is chosen, and when the information can be either symmetric or asymmetric. The novel feature of our model is that the information asymmetry stems from the assumption that the government may not a priori know the true mode of competition. The intervention in the above set-up allows the domestic firm to manipulate the domestic government and results in a socially inefficient choice of the strategic variable. However, commitment to free trade leads to forgoing the benefits from profit-shifting. Yet, from the social point of view, free trade may be optimal even under the assumption of symmetric information. Due to costly signalling, this result is reinforced in the case of asymmetric information. Journal: International Economic Journal Pages: 417-446 Issue: 3 Volume: 19 Year: 2005 Keywords: Strategic trade policy, free trade, first-best versus second-best policy, government's commitment, signalling, X-DOI: 10.1080/10168730500199640 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500199640 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:3:p:417-446 Template-Type: ReDIF-Article 1.0 Author-Name: Imho Kang Author-X-Name-First: Imho Author-X-Name-Last: Kang Author-Name: Jeong-yoo Kim Author-X-Name-First: Jeong-yoo Author-X-Name-Last: Kim Title: Standardization in electronic money Abstract: Electronic money services are provided by the combination of Integrated Circuit (IC) cards and terminals. The compatibility of different brands of electronic money can be enabled by firms' joint adoption of standard terminals. In this paper, we analyse the effect of achieving compatibility among different brands of electronic money. We show that, if the unit production cost of a standard terminal is not so much different from that of a non-standard one, firms' joint adoption of standard terminals will increase the total sales of IC cards and the network size of terminals, thus raising consumers' surplus and firms' profits. On the other hand, if the unit cost of a standard terminal is so high that firms are discouraged from voluntarily adopting standard ones, the government may employ subsides to enhance efficiency. However, if the duty of implementing standardization is placed solely on the firms without subsidies, all the agents, including consumers and retailers, will be left worse off. Journal: International Economic Journal Pages: 447-459 Issue: 3 Volume: 19 Year: 2005 Keywords: Electronic money, network externality, two-sided market, standardization, compatibility, X-DOI: 10.1080/10168730500199442 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500199442 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:3:p:447-459 Template-Type: ReDIF-Article 1.0 Author-Name: Mohsen Bahmani-oskooee Author-X-Name-First: Mohsen Author-X-Name-Last: Bahmani-oskooee Author-Name: Charikleia Economidou Author-X-Name-First: Charikleia Author-X-Name-Last: Economidou Title: How stable is the demand for money in Greece? Abstract: The cointegration technique is now a common method of estimating any money demand function. Numerous studies that applied this technique to estimate the money demand function in Greece, interpreted their finding of cointegration as a sign of stable money demand. In this paper, after incorporating CUSUM and CUSUMSQ tests into cointegration analysis, we show that even though M1 and M2 monetary aggregates are cointegrated with income and interest rate, the M2 money demand function is unstable while M1 is stable. Journal: International Economic Journal Pages: 461-472 Issue: 3 Volume: 19 Year: 2005 Keywords: Money demand, cointegration, stability test, Greece, X-DOI: 10.1080/10168730500199558 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500199558 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:3:p:461-472 Template-Type: ReDIF-Article 1.0 Author-Name: William Miles Author-X-Name-First: William Author-X-Name-Last: Miles Title: Do frontier equity markets exhibit common trends and still provide diversification opportunities? Abstract: Many small, frontier equity markets in regions such as Africa and Eastern Europe have opened in recent years. As in other larger emerging markets, important issues for investors are the extent of financial integration with exchanges in other countries and, if some reasonable degree of integration is found, whether such markets still provide diversification opportunities. Here, we will examine a frequently used metric of integration by testing for the existence of common trends, or cointegration, in these frontier markets. While common stochastic trends are found, results show that coefficients on cointegrating vectors are at times negative, and reaction to deviations from the long-run trend are often slow, thus indicating that frontier markets are a good source of diversification opportunities despite a degree of integration. Journal: International Economic Journal Pages: 473-482 Issue: 3 Volume: 19 Year: 2005 Keywords: Portfolio choice, international financial markets, X-DOI: 10.1080/10168730500199475 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500199475 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:3:p:473-482 Template-Type: ReDIF-Article 1.0 Author-Name: Philip Bodman Author-X-Name-First: Philip Author-X-Name-Last: Bodman Author-Name: Mark Crosby Author-X-Name-First: Mark Author-X-Name-Last: Crosby Title: Are business cycles independent in the G7? Abstract: In this paper we examine the relationships between business cycles in the G7 countries. We focus on whether recessionary periods in one country are independent of the timing of recessions in other countries in the G7, using three different methods for dating recessions. We find that the evidence is mixed on whether phases of the business cycle in North America and in European countries are independent, or whether there is a common phase structure in the business cycle across all the G7 economies. NBER dates suggest that business cycles are synchronised, while other methods for generating business cycle chronologies are more consistent with regional, rather than international cycles. We also find mixed evidence on whether the UK is synchronised with European countries, while Japan quite clearly has the cycle that is most independent of other G7 countries. Journal: International Economic Journal Pages: 483-499 Issue: 4 Volume: 19 Year: 2005 Keywords: G7, business cycles, recessions, X-DOI: 10.1080/10168730500381917 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500381917 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:4:p:483-499 Template-Type: ReDIF-Article 1.0 Author-Name: Madhu Mohanty Author-X-Name-First: Madhu Author-X-Name-Last: Mohanty Title: An alternative method of estimating the worker's reservation wage Abstract: This study follows the standard bivariate decision theory of employment and proposes an alternative technique to estimate reservation wages of employed, unemployed and out-of-labor-force (OLF) workers. The validity of this approach is demonstrated by testing several reservation wage hypotheses recommended in earlier studies. Using reservation wages estimated under this new approach, the study further examines the determinants of this important variable. Journal: International Economic Journal Pages: 501-522 Issue: 4 Volume: 19 Year: 2005 Keywords: Reservation wages, bivariate probit, selection bias, participation decision, X-DOI: 10.1080/10168730500382170 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500382170 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:4:p:501-522 Template-Type: ReDIF-Article 1.0 Author-Name: Ho-Chuan Huang Author-X-Name-First: Ho-Chuan Author-X-Name-Last: Huang Author-Name: Wan-hsiu Cheng Author-X-Name-First: Wan-hsiu Author-X-Name-Last: Cheng Title: Tests of the CAPM under structural changes Abstract: In accordance with the empirical regularity of time-varying betas we estimate and test for the Sharpe-Lintner CAPM by allowing for structural change(s) in betas. Empirical applications using BM- and size-sorted decile portfolios suggest the following interesting results. Firstly, there exists at least one break for all the portfolios under consideration. Secondly, the estimated break dates are quite similar for some of the portfolios, indicating the possible existence of a common break using multivariate time series. Finally, we find the CAPM can be consistent with the data in some regimes but may appear to be inconsistent with the data in some other regimes. This particularly appealing feature has been completely ruled out under the conventional single-equation framework. Journal: International Economic Journal Pages: 523-541 Issue: 4 Volume: 19 Year: 2005 Keywords: CAPM, beta, structural change, X-DOI: 10.1080/10168730500381990 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500381990 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:4:p:523-541 Template-Type: ReDIF-Article 1.0 Author-Name: Tomoe Moore Author-X-Name-First: Tomoe Author-X-Name-Last: Moore Author-Name: Christopher Green Author-X-Name-First: Christopher Author-X-Name-Last: Green Title: Other financial institutions' portfolio behaviour and policy implications: A study of India Abstract: Applied literature has largely neglected the asset decision of other financial institutions (OFIs), though it may possess important policy implications. In this paper, portfolio behaviour of OFIs in India is modelled by using the annual flow of funds data for 1951/52 to 1993/94. The long-run model of the Almost Ideal Demand System and the allied concepts of cointegration generated economically and statistically plausible results. We find a strong influence of interest rates on portfolio behavior, thereby the role of interest rates on resource allocation. The paper concludes that the macroeconomic management through monetary policy actions may not be unnecessarily limited through the channel of OFIs in the post-financial reform regime in India. Journal: International Economic Journal Pages: 543-562 Issue: 4 Volume: 19 Year: 2005 Keywords: Other financial institutions, financial liberalization, interest rates, Almost Ideal Demand System, India, X-DOI: 10.1080/10168730500382089 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500382089 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:4:p:543-562 Template-Type: ReDIF-Article 1.0 Author-Name: Jose Sanchez-fung Author-X-Name-First: Jose Author-X-Name-Last: Sanchez-fung Title: Estimating a monetary policy reaction function for the dominican republic Abstract: The paper specifies and estimates a hybrid McCallum-Taylor monetary policy reaction function for the Dominican Republic (DR). The estimated reactions suggest that the Central Bank of the DR has been biased towards targeting the exchange rate. These findings are in line with the evidence on the fear-of-floating characteristic of developing countries. An evaluation of the estimated rule's historical performance shows that monetary base growth below (above) that implied by the 'average' policy reaction is associated with better (worse) macroeconomic performance. Journal: International Economic Journal Pages: 563-577 Issue: 4 Volume: 19 Year: 2005 Keywords: Monetary policy reaction function, McCallum and Taylor rules, multiple exchange rates, Dominican Republic, X-DOI: 10.1080/10168730500382121 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500382121 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:4:p:563-577 Template-Type: ReDIF-Article 1.0 Author-Name: Masao Oda Author-X-Name-First: Masao Author-X-Name-Last: Oda Author-Name: Robert Stapp Author-X-Name-First: Robert Author-X-Name-Last: Stapp Author-Name: Ichiro Mihara Author-X-Name-First: Ichiro Author-X-Name-Last: Mihara Title: On the new export sector in developing countries Abstract: Many developing countries are establishing a new export sector by accepting foreign direct investment. Developing a three-sectors three-factors general equilibrium model with tariff, this paper considers the condition under which the acceptance of direct investment is desirable for the developing countries. We show that the factor intensity rankings among the sectors play a key role on the welfare effects and that direct investment increases the output of both the new export and the traditional export sector and promotes the export-led growth in developing countries. Journal: International Economic Journal Pages: 579-587 Issue: 4 Volume: 19 Year: 2005 Keywords: New export sector, direct investment, factor intensity, X-DOI: 10.1080/10168730500199608 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500199608 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:19:y:2005:i:4:p:579-587 Template-Type: ReDIF-Article 1.0 Author-Name: Andreas Andersson Author-X-Name-First: Andreas Author-X-Name-Last: Andersson Author-Name: Par Osterholm Author-X-Name-First: Par Author-X-Name-Last: Osterholm Title: Population age structure and real exchange rates in the OECD Abstract: Macroeconomic theory predicts that variations in population cohort sizes will lead to demographically induced real exchange rate movements. While such effects have previously been established for individual countries, this paper exploits cross-sectional time series data to test the prediction for a larger number of economies. A reduced form model with population age shares as regressors is estimated using a panel of 25 OECD countries between 1971 and 2002. The results confirm that demographic structure has significant explanatory power for the real exchange rate and the estimated relationship supports age structure effects in accordance with the life cycle hypothesis. Journal: International Economic Journal Pages: 1-18 Issue: 1 Volume: 20 Year: 2006 Keywords: Demography, real exchange rates, panel data, forecasts, X-DOI: 10.1080/14765280500520261 File-URL: http://www.tandfonline.com/doi/abs/10.1080/14765280500520261 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:1:p:1-18 Template-Type: ReDIF-Article 1.0 Author-Name: Jan Ondrich Author-X-Name-First: Jan Author-X-Name-Last: Ondrich Author-Name: J. David Richardson Author-X-Name-First: J. David Author-X-Name-Last: Richardson Author-Name: Shuo Zhang Author-X-Name-First: Shuo Author-X-Name-Last: Zhang Title: A further investigation of the link between trade and income Abstract: The link between openness and income has received increasing attention as countries try to justify their trade-promoting policies. Recent work of Frankel & Romer (1999) examines the effect of trade on income. We explore how the estimates of the trade effect change when we relax their assumption of heteroscedasticity in the bilateral trade equation they use to construct the instrument for the IV regression. Because the instrument is constructed through a nonlinear transformation, unequal disturbance variances imply inconsistency and not just inefficiency of the Frankel-Romer estimates. We find a smaller positive effect of trade than that found by Frankel & Romer. Journal: International Economic Journal Pages: 19-36 Issue: 1 Volume: 20 Year: 2006 Keywords: Trade, income, heteroscedasticity, instrumental variable, X-DOI: 10.1080/10168730500515464 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500515464 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:1:p:19-36 Template-Type: ReDIF-Article 1.0 Author-Name: Nicolas Peridy Author-X-Name-First: Nicolas Author-X-Name-Last: Peridy Title: Pollution effects of free trade areas: Simulations from a general equilibrium model Abstract: A two-factors, two-goods, three-countries general equilibrium model is developed to assess the effects of a Free Trade Area (FTA) on pollution emissions. It also makes it possible to compare the effects of a discriminating commercial policy with alternative-non discriminating-policies, such as full trade liberalization or non-discriminating protection. A theoretical model is first developed in order to take into account country-differences in factor endowment, environmental regulation, pollution abatement technology, marginal disutilities of pollution, as well as terms of trade effects. This model is subsequently calibrated and computed in accordance with empirical evidence. The main conclusion shows that the move from protection to FTA reduces world pollution emissions. A second result indicates that, in case of full trade liberalization, world pollution is further reduced. Journal: International Economic Journal Pages: 37-62 Issue: 1 Volume: 20 Year: 2006 Keywords: Trade, free trade areas, environment, pollution, general equilibrium models, X-DOI: 10.1080/10168730500515431 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500515431 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:1:p:37-62 Template-Type: ReDIF-Article 1.0 Author-Name: Mohammad Afzal Author-X-Name-First: Mohammad Author-X-Name-Last: Afzal Title: Causality between exports, world income and economic growth in Pakistan Abstract: This paper investigates the direction of causation between GDP representing economic growth, exports and its different categories, imports and world income. After experiencing vigorous import-substitution in the past decades, Pakistan adopted an outward-looking strategy in the late 1980s with an emphasis on export promotion. A strong and stable relationship between GDP and exports and bi-directional causality between manufactured exports and GDP has been found. Export promotion policy is pursued consistently with an emphasis on manufactured exports and this is most likely to contribute adequately to economic growth in the long run. Journal: International Economic Journal Pages: 63-77 Issue: 1 Volume: 20 Year: 2006 Keywords: Exports, economic growth, world income, cointegration, causality, X-DOI: 10.1080/10168730500515399 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500515399 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:1:p:63-77 Template-Type: ReDIF-Article 1.0 Author-Name: Shidong Zhang Author-X-Name-First: Shidong Author-X-Name-Last: Zhang Author-Name: Thomas Lowinger Author-X-Name-First: Thomas Author-X-Name-Last: Lowinger Title: An empirical test of purchasing power parity in selected developing countries: a panel data approach Abstract: This paper examines the empirical validity of Purchasing Power Parity (PPP) for certain large developing economies by using a panel unit root methodology. The test results show that a long run real exchange rate depreciation trend exists in certain developing countries. Without considering this depreciation trend, it is hard to verify the stationarity and to explain the existence of the extremely long half-lives of the real exchange rates. When a linear time trend is included in the tests, the results tend to support the stationarity of the underlying real exchange rate processes, and the half-lives are significantly shorter and their range can be explained by transitory disturbances. Journal: International Economic Journal Pages: 79-86 Issue: 1 Volume: 20 Year: 2006 Keywords: Purchasing power parity, panel unit root, half-life, X-DOI: 10.1080/10168730500515266 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500515266 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:1:p:79-86 Template-Type: ReDIF-Article 1.0 Author-Name: Igbekele Ajibefun Author-X-Name-First: Igbekele Author-X-Name-Last: Ajibefun Author-Name: Adebiyi Daramola Author-X-Name-First: Adebiyi Author-X-Name-Last: Daramola Author-Name: Abiodun Falusi Author-X-Name-First: Abiodun Author-X-Name-Last: Falusi Title: Technical efficiency of small scale farmers: An application of the stochastic frontier production function to rural and urban farmers in Ondo State, Nigeria Abstract: The main objective of this study was to estimate empirically the technical efficiency of rural and urban small-scale farmers in Ondo State, Nigeria, using the stochastic frontier production function. With the rapid urbanization being currently experienced in Nigeria, the socio-economic and the farming environment in both the rural and urban centres are undergoing transformation. This study involved collection and analysis of data on 200 food crop farmers from rural and urban centres in Ondo state of Nigeria. The results of analysis show that there are wide differences in the socio-economic and production inputs of the farmers from rural and urban centres. While farmers from rural centres have relatively larger farms, the urban farmers have better access to production inputs, especially, fertilizer. However, rural farmers, with a mean technical efficiency of 0.66 are found to be more technically efficient than urban farmers, who have a mean technical efficiency of 0.57. There is a wide confidence interval around the point estimates of the technical efficiency scores. Level of education, farming experience and land are found to have negative effects on technical inefficiency of both rural and urban farms. The marginal effect of inefficiency variables is, however, found to be highest for education among both rural and urban farms. Journal: International Economic Journal Pages: 87-107 Issue: 1 Volume: 20 Year: 2006 Keywords: Technical efficiency, returns-to-scale, rural and urban farmers, Nigeria, X-DOI: 10.1080/10168730500515498 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500515498 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:1:p:87-107 Template-Type: ReDIF-Article 1.0 Author-Name: Shyh-Wei Chen Author-X-Name-First: Shyh-Wei Author-X-Name-Last: Chen Author-Name: Chung-Hua Shen Author-X-Name-First: Chung-Hua Author-X-Name-Last: Shen Title: Is there a duration dependence in Taiwan's business cycles? Abstract: This paper intends to investigate the duration dependent feature of Taiwan's business cycles. The constant Markov switching model is revised to take account of the duration dependent feature. The most innovative findings herein are that there is no duration dependence for contraction for the circa pre-1990 periods and no duration dependence for expansion for the circa post-1990 periods. However, there is duration dependence for economic expansion for the circa pre-1990 and duration dependence for contraction for circa post-1990 periods, respectively. In addition, the recessionary dates identified by the duration dependent Markov switching model are identical to the officially defined recessionary chronologies. Journal: International Economic Journal Pages: 109-128 Issue: 1 Volume: 20 Year: 2006 Keywords: Duration dependence, business cycle, Markov switching model, Gibbs sampling, X-DOI: 10.1080/10168730500515357 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500515357 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:1:p:109-128 Template-Type: ReDIF-Article 1.0 Author-Name: Gregory Chow Author-X-Name-First: Gregory Author-X-Name-Last: Chow Author-Name: Yan Shen Author-X-Name-First: Yan Author-X-Name-Last: Shen Title: Demand for education in China Abstract: This paper offers an explanation of the quantitative changes in education spending by the framework of demand analysis, including the changes in the ratio of educational funding to GDP in the period 1991-2002. The income effect is estimated mainly by using cross-provincial data, while time series data are used to estimate the price effect. Changes in government and non-government spending through time can be satisfactorily explained by the income and price effects. Demand for education services in the three levels of primary school, secondary school and higher education, and aggregate demand for all education services are investigated. The relation between income inequality and inequality in education opportunities is briefly discussed. Ten important findings are stated. Journal: International Economic Journal Pages: 129-147 Issue: 2 Volume: 20 Year: 2006 X-DOI: 10.1080/02664760600699468 File-URL: http://www.tandfonline.com/doi/abs/10.1080/02664760600699468 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:2:p:129-147 Template-Type: ReDIF-Article 1.0 Author-Name: Joseph Gagnon Author-X-Name-First: Joseph Author-X-Name-Last: Gagnon Title: The effect of exchange rates on prices, wages, and profits: A case study of the United Kingdom in the 1990s Abstract: During the 1990s the United Kingdom experienced large and sudden exchange rate movements that had no apparent impact on overall consumer prices. This paper shows that the stability of UK consumer prices was made possible in part by offsetting movements in the price-cost margins of foreign exporters and in part by offsetting price-cost margins in the UK distribution sector. At the same time, UK manufacturers experienced margin swings in the opposite direction, largely due to their role as exporters. Thus, sterling depreciation boosted the profits of UK manufacturers and squeezed the profits of UK distributors, while sterling appreciation had the opposite effects. Journal: International Economic Journal Pages: 149-160 Issue: 2 Volume: 20 Year: 2006 Keywords: Appreciation, depreciation, operating surplus, pass-through, X-DOI: 10.1080/10168730600756570 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730600756570 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:2:p:149-160 Template-Type: ReDIF-Article 1.0 Author-Name: Mark Holmes Author-X-Name-First: Mark Author-X-Name-Last: Holmes Author-Name: Ping Wang Author-X-Name-First: Ping Author-X-Name-Last: Wang Title: Asymmetric adjustment towards long-run PPP: Some new evidence for Asian economies Abstract: This paper investigates relative purchasing power parity for a sample of nine Asian economies during the post-Bretton Woods floating exchange rate era. While most existing studies of purchasing power parity employ linear tests of non-stationarity or non-cointegration, we employ a new cointegration test, recently advocated by Enders & Siklos and Enders & Dibooglu, that tests for an asymmetric adjustment towards parity with respect to positive and negative real exchange rate deviations from parity. In most cases, we find that long-run purchasing power parity is most likely to hold with respect to positive deviations only. Journal: International Economic Journal Pages: 161-177 Issue: 2 Volume: 20 Year: 2006 Keywords: PPP, cointegration, asymmetries, X-DOI: 10.1080/10168730600699481 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730600699481 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:2:p:161-177 Template-Type: ReDIF-Article 1.0 Author-Name: Noh-Sun Kwark Author-X-Name-First: Noh-Sun Author-X-Name-Last: Kwark Author-Name: Yong-Sang Shyn Author-X-Name-First: Yong-Sang Author-X-Name-Last: Shyn Title: International R&D spillovers revisited: Human capital as an absorptive capacity for foreign technology Abstract: This paper examines aspects of R&D spillovers across countries, in particular, the role of international trade and human capital as the catalysts for international diffusion of technology. We present a new way of measuring foreign R&D stocks embodied in foreign intermediate goods and capital equipment, which we argue is free from the criticism of previous measures. With the pooled panel data spanning 1970 through 1995 for 103 countries, we find that the effects of foreign R&D on total factor productivity growth of both industrial countries and developing countries are substantial and that human capital is the most influential channel for absorbing foreign R&D spillovers. Journal: International Economic Journal Pages: 179-196 Issue: 2 Volume: 20 Year: 2006 Keywords: R&D spillovers, human capital, international technology diffusion, X-DOI: 10.1080/10168730600699556 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730600699556 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:2:p:179-196 Template-Type: ReDIF-Article 1.0 Author-Name: Masahiro Hori Author-X-Name-First: Masahiro Author-X-Name-Last: Hori Author-Name: Satoshi Shimizutani Author-X-Name-First: Satoshi Author-X-Name-Last: Shimizutani Title: Did Japanese consumers become more prudent during 1998-1999? Evidence from household-level data Abstract: This paper explores empirically whether Japanese consumers became more prudent in the second half of the 1990s, a decade in which Japan registered historically low economic growth. Employing the methodology developed by Dynan (1993), this study uses micro-level data from the Family Savings Survey and the Family Income and Expenditure Survey to estimate the coefficient of prudence for Japanese households in the second half of the 1990s. The estimates reveal that the coefficient of prudence is positive and statistically significant in the 1998-1999 period. The obtained value for the coefficient of prudence is four, which is much higher than that estimated for US households (not significantly different from zero) or UK households (around 2). The estimated coefficient for young households is higher still, which is consistent with simulation studies conducted by Gourinchas & Parker (2002) showing that precaution is the most important saving motive for younger households. Journal: International Economic Journal Pages: 197-209 Issue: 2 Volume: 20 Year: 2006 Keywords: Precautionary saving, coefficient of prudence, Euler equation, household data, X-DOI: 10.1080/10168730600699523 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730600699523 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:2:p:197-209 Template-Type: ReDIF-Article 1.0 Author-Name: Don Clark Author-X-Name-First: Don Author-X-Name-Last: Clark Title: Country and industry-level determinants of vertical specialization-based trade Abstract: This paper investigates country and industry-level determinants of vertical specialization-based trade. Industries that engage in this pattern of trade are identified through their use of offshore assembly provisions in the US tariff code. Findings explain why industries engage in vertical specialization-based trade and shed light on factors that enter production location decisions. Identifying factors that encourage vertical specialization-based production and trade will enhance our understanding of industry strategy and how trade patterns will evolve as the process of globalization continues. Results suggest vertical specialization-based trade will continue to grow relative to total trade. Journal: International Economic Journal Pages: 211-225 Issue: 2 Volume: 20 Year: 2006 Keywords: Vertical specialization, production sharing, offshore assembly provisions, X-DOI: 10.1080/10168730600699515 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730600699515 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:2:p:211-225 Template-Type: ReDIF-Article 1.0 Author-Name: Darrin Downes Author-X-Name-First: Darrin Author-X-Name-Last: Downes Author-Name: Winston Moore Author-X-Name-First: Winston Author-X-Name-Last: Moore Author-Name: Dwayne Jackson Author-X-Name-First: Dwayne Author-X-Name-Last: Jackson Title: Financial liberalization and the stationarity of money multiplier Abstract: In countries without an explicit inflation targeting mechanism, a stable relationship between the monetary base and the money supply allows policymakers to implement changes in monetary policy with a reasonable degree of certainty about the impact on the money supply. The relationship can, however, be influenced by major structural shifts such as financial sector reforms. The present study finds that when structural change bought about by financial liberalisation is ignored, the unit root hypothesis is spuriously accepted. However, once this break is incorporated into the analysis, the multiplier exhibits no presence of a stochastic trend. Journal: International Economic Journal Pages: 227-240 Issue: 2 Volume: 20 Year: 2006 Keywords: Money multiplier, financial liberalisation, Caribbean, X-DOI: 10.1080/10168730600699507 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730600699507 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:2:p:227-240 Template-Type: ReDIF-Article 1.0 Author-Name: Young-Sun Lee Author-X-Name-First: Young-Sun Author-X-Name-Last: Lee Author-Name: Hyung-Gon Jeong Author-X-Name-First: Hyung-Gon Author-X-Name-Last: Jeong Title: The determinants of economic growth of transition economies: Economic reform versus initial conditions Abstract: This study analyzes factors for economic recovery of transition economies in Europe and the Commonwealth of Independent States for the period of the 1990s. Covariance structure analysis is employed to estimate the structural equation system, and exploratory factor analysis is conducted to measure initial conditions and economic policy as latent variables. The result of analysis shows that the effect of initial conditions is negative and the impact of economic reform on growth is positive. However, the negative effect of initial conditions had overridden the positive impact of economic policy as of 2000. The reason that transition economies could not recover their pre-transition GDP level (even after ten years of transition history) seems to stem from the negative influence of initial conditions on growth rather than the slow speed of economic reform. Journal: International Economic Journal Pages: 241-252 Issue: 2 Volume: 20 Year: 2006 Keywords: Transition economy, growth, economic reform, covariance analysis, initial conditions, X-DOI: 10.1080/10168730600699572 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730600699572 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:2:p:241-252 Template-Type: ReDIF-Article 1.0 Author-Name: Dani Rodrik Author-X-Name-First: Dani Author-X-Name-Last: Rodrik Title: The social cost of foreign exchange reserves Abstract: There has been a very rapid rise since the early 1990s in foreign reserves held by developing countries. These reserves have climbed to almost 30% of developing countries' GDP and 8 months of imports. Assuming reasonable spreads between the yield on reserve assets and the cost of foreign borrowing, the income loss to these countries amounts to close to 1% of GDP. Conditional on existing levels of short-term foreign borrowing, this does not seem too steep a price as an insurance premium against financial crises. But why developing countries have not tried harder to reduce short-term foreign liabilities in order to achieve the same level of liquidity (thereby paying a smaller cost in terms of reserve accumulation) remains an important puzzle. Journal: International Economic Journal Pages: 253-266 Issue: 3 Volume: 20 Year: 2006 Keywords: Reserves,, external debt, X-DOI: 10.1080/10168730600879331 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730600879331 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:3:p:253-266 Template-Type: ReDIF-Article 1.0 Author-Name: Yves Bourdet Author-X-Name-First: Yves Author-X-Name-Last: Bourdet Author-Name: Hans Falck Author-X-Name-First: Hans Author-X-Name-Last: Falck Title: Emigrants' remittances and Dutch Disease in Cape Verde Abstract: Emigrants' remittances have increased rapidly over the past two decades. While earlier studies have focused on their microeconomic effect on incomes and poverty in recipient countries, the present study concentrates on the macroeconomic impact of remittances on the real exchange rate in Cape Verde. A main conclusion is that remittances give rise to a sort of Dutch Disease effect and thereby have an adverse effect on the competitiveness of the tradable sector. The magnitude of this effect in Cape Verde is not that large, however. The changing orientation of official aid to more growth-oriented aid, combined with a more export-oriented domestic policy, has contributed to limiting the adverse impact of emigrants' remittances on the competitiveness of the Cape Verdean economy. Journal: International Economic Journal Pages: 267-284 Issue: 3 Volume: 20 Year: 2006 Keywords: Remittances,, real exchange rate,, Dutch Disease,, development assistance, X-DOI: 10.1080/10168730600879323 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730600879323 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:3:p:267-284 Template-Type: ReDIF-Article 1.0 Author-Name: Wong Hock Tsen Author-X-Name-First: Wong Hock Author-X-Name-Last: Tsen Title: Granger causality tests among openness to international trade, human capital accumulation and economic growth in China: 1952-1999 Abstract: This study examines Granger causality among openness to international trade, human capital accumulation and economic growth in China using time series data over the period from 1952 to 1999 and a sub-period, i.e. a period from 1978 to 1999. For the 1952-1999 period, economic growth is found to Granger cause human capital accumulation and not vice versa. For the 1978-1999 period, economic growth and openness to international trade, economic growth and human capital accumulation, and human capital accumulation and openness to international trade are found to have bidirectional Granger causality, respectively. Thus, there is a dynamic relationship among openness to international trade, human capital accumulation and economic growth. The experience of economic reform in China could be an example to other developing countries. Journal: International Economic Journal Pages: 285-302 Issue: 3 Volume: 20 Year: 2006 Keywords: Openness to international trade, human capital accumulation, economic growth, China, Granger causality, X-DOI: 10.1080/10168730600879356 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730600879356 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:3:p:285-302 Template-Type: ReDIF-Article 1.0 Author-Name: Chien-Chiang Lee Author-X-Name-First: Chien-Chiang Author-X-Name-Last: Lee Author-Name: Chun-Ping Chang Author-X-Name-First: Chun-Ping Author-X-Name-Last: Chang Title: Social security expenditure and GDP in OECD countries: A cointegrated panel analysis Abstract: Using panel data unit root tests and panel cointegration tests, as well as estimation techniques appropriate for heterogeneous panels such as the full modified OLS, this paper re-examines the long-run co-movement and the causal relationship between GDP and social security expenditure in a bivariate model, employing data on 25 OECD countries from 1980 to 2001. Our cointegration test results show strong evidence in favour of the existence of a long-run equilibrium cointegrating relationship between GDP and social security expenditure after allowing for a heterogeneous country effect. Regarding the panel-based error correction model, we find that GDP and social security expenditure lack short-run causality, but reveal the existence of long-run bidirectional causality. This shows that, in the long run, economic growth must be based on a social welfare policy that should be carried out, and economic growth can facilitate contiguous development in a social welfare policy. Lastly, we also provide evidence to support that social security expenditure can affect growth through the savings and human capital accumulation in OECD countries. Journal: International Economic Journal Pages: 303-320 Issue: 3 Volume: 20 Year: 2006 Keywords: Social security expenditure, economic growth, panel cointegration, causality, X-DOI: 10.1080/10168730600879372 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730600879372 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:3:p:303-320 Template-Type: ReDIF-Article 1.0 Author-Name: Alain Maurin Author-X-Name-First: Alain Author-X-Name-Last: Maurin Author-Name: Sandra Sookram Author-X-Name-First: Sandra Author-X-Name-Last: Sookram Author-Name: Patrick Kent Watson Author-X-Name-First: Patrick Kent Author-X-Name-Last: Watson Title: Measuring the size of the hidden economy in Trinidad & Tobago, 1973-1999 Abstract: In this paper, an attempt is made to measure the hidden economy of Trinidad & Tobago over the period 1973-1999, within the Structural Cointegrating VAR (SCVAR) framework. Using a Tanzi-type currency demand approach as a starting point, a multiple equation SCVAR model is estimated that contains two long-run relationships linking the demand for currency with other variables. The model is evaluated on the basis of its persistence profiles, its impulse responses and other statistical criteria. It is solved using a Gauss-Siedel algorithm and is used to establish that the size of the hidden economy rose from a low of about 14% of measured GDP in the early 1970s to a high of 36% in 1981, and is currently about 20% of measured GDP. Hidden economic activity is also found to be highly positively correlated with activity in the regular economy. Journal: International Economic Journal Pages: 321-341 Issue: 3 Volume: 20 Year: 2006 Keywords: Caribbean, Trinidad & Tobago, hidden economy, structural cointegrating VAR models, X-DOI: 10.1080/10168730600879406 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730600879406 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:3:p:321-341 Template-Type: ReDIF-Article 1.0 Author-Name: Adam Honig Author-X-Name-First: Adam Author-X-Name-Last: Honig Title: A model of liability dollarization and myopic governments Abstract: Liability dollarization of the domestic banking system represents a source of vulnerability for emerging market countries. The root cause is a lack of faith in the domestic currency, which ultimately stems from the belief that the government will not follow policies that promote long-run currency stability. This paper presents a model in which government myopia determines the unofficial dollarization of bank credit. Specifically, myopic politicians will choose low interest rates to expand short-run output in order to get re-elected, but this choice has the long-run consequence of increasing dollar lending. Increased liability dollarization is shown to force the hand of future decision-makers into choosing fixed exchange rates because of the fear that large depreciations will destroy balance sheets. The results imply that institutional reforms are necessary to reverse liability dollarization. Journal: International Economic Journal Pages: 343-355 Issue: 3 Volume: 20 Year: 2006 Keywords: Liability dollarization, government myopia, X-DOI: 10.1080/10168730600879414 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730600879414 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:3:p:343-355 Template-Type: ReDIF-Article 1.0 Author-Name: Akihiko Kaneko Author-X-Name-First: Akihiko Author-X-Name-Last: Kaneko Title: Specialization in a dynamic trade model: An overlapping generations case Abstract: We explore a small open economy with overlapping generations to show that demographic structure is an important factor for the determination of a production pattern in the dynamic trade theory. In the representative agent model, Baxter (1992) shows that even if there are two commodities and two production factors, there is a Ricardian implication that opening up to trade leads to perfect specialization in a small open economy. In contrast, using the overlapping generations model, we find that the heterogeneity of the economic agents generally makes imperfect specialization occur. We also find that whether the stability condition holds or not is crucial for the determination of the long-run production pattern. Journal: International Economic Journal Pages: 357-368 Issue: 3 Volume: 20 Year: 2006 Keywords: Specialization, dynamic Heckscher-Ohlin model, overlapping generations, X-DOI: 10.1080/10168730600879422 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730600879422 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:3:p:357-368 Template-Type: ReDIF-Article 1.0 Author-Name: Kazuhiro Tetsu Author-X-Name-First: Kazuhiro Author-X-Name-Last: Tetsu Title: Regional development and rural-based export processing zones in developing countries Abstract: Many empirical, descriptive and theoretical studies have revealed various aspects of export processing zones (EPZs), but little attention has been given to the issue of the location of EPZs. In this paper, we provide a new theoretical approach to it: a general equilibrium model that consists of two regions and makes possible a comparison between the economic effects of an expansion of an EPZ in the rural region and that of multinational corporations (MNCs) in the urban region. The result is interesting: expanding the EPZ in the rural region may be a less desirable policy for a developing country than expanding the MNC sector in the urban region. Journal: International Economic Journal Pages: 369-383 Issue: 3 Volume: 20 Year: 2006 Keywords: Export processing zones, foreign capital inflow, backward linkages, regional development, X-DOI: 10.1080/10168730600879448 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730600879448 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:3:p:369-383 Template-Type: ReDIF-Article 1.0 Author-Name: Kari Heimonen Author-X-Name-First: Kari Author-X-Name-Last: Heimonen Title: Time-Varying Fundamentals of the Euro-Dollar Exchange Rate Abstract: This study examines changes in the impact of the economic fundamentals on the euro-dollar exchange rate. First, the monetary model is augmented with the equity markets and the model is estimated in its structural form. Second, the time-varying impacts of the long-run fundamentals representing equilibrium in different markets on the euro-dollar exchange rate are examined using Kalman filtering. The time-varying structural model indicated that the relative importance of the different fundamentals was not equal and the impact of the fundamentals was time-dependent. Journal: International Economic Journal Pages: 385-407 Issue: 4 Volume: 20 Year: 2006 Keywords: Exchange rate, euro-dollar, structural form, Kalman filtering, X-DOI: 10.1080/10168730600883515 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730600883515 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:4:p:385-407 Template-Type: ReDIF-Article 1.0 Author-Name: Gamal Atallah Author-X-Name-First: Gamal Author-X-Name-Last: Atallah Title: Opportunity Costs, Competition, and Firm Selection Abstract: The paper questions the standard economic assumptions that competing economic agents have identical reservation utility levels, and that when differences in opportunity costs exist, they can be conveniently represented by fixed costs. Asymmetries in opportunity costs are considered in relation to current efficiency. The effect of this interchangeability of skills is studied in the context of the effect of entry on firm selection in a Cournot setting. It is found that inefficient firms are more likely to crowd out efficient ones when the relationship between current efficiency and opportunity costs is strong, and when the fixed costs of changing markets are high. Moreover, in the long-run, firms with intermediate cost levels are likely to induce the exit of low and high cost firms. The model sheds light on the benefits of diversification by multiproduct and multinational firms, and their relationship to skill transferability. Journal: International Economic Journal Pages: 409-430 Issue: 4 Volume: 20 Year: 2006 Keywords: Entry, exit, firm selection, firm survival, opportunity costs, skill transferability, diversification, X-DOI: 10.1080/10168730601039976 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730601039976 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:4:p:409-430 Template-Type: ReDIF-Article 1.0 Author-Name: Anusua Datta Author-X-Name-First: Anusua Author-X-Name-Last: Datta Author-Name: Hamid Mohtadi Author-X-Name-First: Hamid Author-X-Name-Last: Mohtadi Title: Endogenous Imitation and Technology Absorption in a Model of North-South Trade Abstract: This paper considers the transfer of technology from the North to the South that occurs through trade in high-technology goods and explicitly models the 'reverse-engineering' process that allows the South to assimilate new technologies. A key finding of this study is that the South's rate of growth is dictated by the size of the country's human capital, which determines its absorptive capacity and its ability to assimilate knowledge from the North. We find that while a Southern country that is poor in human capital can only imitate, Southern countries that possess sufficiently large human capital endowments, beyond a certain threshold, signal the onset of innovation. We also find that the North enjoys a higher rate of innovation and growth with trade than without. North's gains are the highest when it trades with a human-capital 'poor' South, because imitation increases South's demand for Northern intermediates. But trade with the Southern countries that are human capital rich (and therefore involved in innovation), dampens their demand for Northern imports, adversely affecting North's growth. The model predicts growth convergence between the North and a South that is well passed the threshold for innovation. Journal: International Economic Journal Pages: 431-459 Issue: 4 Volume: 20 Year: 2006 Keywords: Innovation, imitation, technology transfer, human-capital, endogenous growth, X-DOI: 10.1080/10168730601027005 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730601027005 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:4:p:431-459 Template-Type: ReDIF-Article 1.0 Author-Name: Yanhong Zhang Author-X-Name-First: Yanhong Author-X-Name-Last: Zhang Author-Name: Hui Chang Author-X-Name-First: Hui Author-X-Name-Last: Chang Author-Name: Jean Gauger Author-X-Name-First: Jean Author-X-Name-Last: Gauger Title: The Threshold Effect of Exchange Rate Volatility on Trade Volume: Evidence from G-7 Countries Abstract: This paper uses a threshold model to examine a possible threshold effect in the impact of exchange rate volatility on trade volume for the bilateral trade volumes between the US and other G-7 countries. A grid-searching method is used to obtain the threshold points, and time-series econometric techniques are applied to estimate the long run stable relationships as well as short-run dynamics. The results support the existence of nonlinearity in the effect of exchange rate volatility, and indicate that trade volume tends to increase when exchange rate volatility surpasses a certain threshold point. Journal: International Economic Journal Pages: 461-476 Issue: 4 Volume: 20 Year: 2006 Keywords: Exchange rate volatility, trade, threshold, X-DOI: 10.1080/10168730601027039 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730601027039 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:4:p:461-476 Template-Type: ReDIF-Article 1.0 Author-Name: Vassilis Rapanos Author-X-Name-First: Vassilis Author-X-Name-Last: Rapanos Title: Tax Incidence in a Model with Efficiency Wages and Unemployment Abstract: The purpose of the present paper is to examine the effects of taxation on income distribution in a model with efficiency wages and involuntary unemployment. Central to our efficiency-wage model is the hypothesis that firms set wages above market-clearing levels, whenever the productivity of labor depends on the real wage paid by the firm, and unemployment. Within a two sector general equilibrium model we study the incidence of factor and commodity taxes on income distribution, and unemployment. Our findings differ substantially from those derived by the traditional neoclassical analysis, originally developed by Harberger, and as it has been extended by several authors. Journal: International Economic Journal Pages: 477-494 Issue: 4 Volume: 20 Year: 2006 Keywords: Tax incidence, efficiency wages, X-DOI: 10.1080/10168730601027070 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730601027070 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:4:p:477-494 Template-Type: ReDIF-Article 1.0 Author-Name: Yin-Wong Cheung Author-X-Name-First: Yin-Wong Author-X-Name-Last: Cheung Author-Name: Kon Lai Author-X-Name-First: Kon Author-X-Name-Last: Lai Title: A Reappraisal of the Border Effect on Relative Price Volatility Abstract: Engel & Rogers (1996) find that crossing the US-Canada border can considerably raise relative price volatility and that exchange rate fluctuations explain about one-third of the volatility increase. Using a decomposition method, this study re-evaluates the border effect. It is shown that cross-country heterogeneity in price volatility can induce a bias in measuring the border effect unless proper adjustment is made to correct it. We further examine the implication of symmetric sampling for the border effect estimation under the decomposition approach. Two conditions governing the strength of the border effect are identified. In particular, the more dissimilar the price shocks are across countries, the greater the border effect will be. Decomposition estimates also suggest that exchange rate fluctuations actually account for a large majority of the border effect. Journal: International Economic Journal Pages: 495-513 Issue: 4 Volume: 20 Year: 2006 Keywords: Relative price volatility, exchange rate volatility, national border, distance, dissimilar shocks, X-DOI: 10.1080/10168730601027120 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730601027120 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:4:p:495-513 Template-Type: ReDIF-Article 1.0 Author-Name: Bin Peng Author-X-Name-First: Bin Author-X-Name-Last: Peng Title: Pricing Geometric Asian Options under the CEV Process Abstract: This paper discusses the pricing of geometric Asian options when the underlying stock follows the constant elasticity of variance (CEV) process. We build a binomial tree method to estimate the CEV process and use it to price geometric Asian options. We find that the binomial tree method for the lognormal case can effectively solve the computational problems arising from the inherent complexities of geometric Asian options when the stock price follows the CEV process. We present numerical results to demonstrate the validity and the convergence of the approach for the different parameter values set in the CEV process. Journal: International Economic Journal Pages: 515-522 Issue: 4 Volume: 20 Year: 2006 Keywords: Exotic options, geometric Asian options, binomial tree method, CEV process, X-DOI: 10.1080/10168730500515316 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730500515316 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:4:p:515-522 Template-Type: ReDIF-Article 1.0 Author-Name: Quan Le Author-X-Name-First: Quan Author-X-Name-Last: Le Author-Name: Meenakshi Rishi Author-X-Name-First: Meenakshi Author-X-Name-Last: Rishi Title: Corruption and Capital Flight: An Empirical Assessment Abstract: This paper considers the role of corruption in impelling capital flight. Identifying corruption as one dimension of poor governance, the empirical analysis explores direct linkages between corruption and capital flight in a broad sample of countries. The novelty of this investigation is that it is based on a portfolio choice model of asset allocation that explicitly recognizes corruption as contributing to the variance of domestic investment risk. The main testable proposition emerging from our theoretical specification is stated thus: does corruption impel capital flight by raising the risk of domestic investment, ceteris paribus? An econometric analysis suggests that, holding other determinants of capital flight constant, corruption does have a positive and significant impact on capital flight. Based on these results, the paper concludes that advocating good governance by combating corruption makes a great deal of sense for countries aiming to staunch capital flight. Capital flight and corruption are some of the main causes of the poverty in the South. Without capital flight and corruption the debt crisis would not exist in its current form. Capital Flight and Corruption Treaty NGO Alternative Treaties at the 1992 Global Forum Journal: International Economic Journal Pages: 523-540 Issue: 4 Volume: 20 Year: 2006 Keywords: Capital flight, governance, corruption, economic risk, X-DOI: 10.1080/10168730601027161 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730601027161 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:20:y:2006:i:4:p:523-540 Template-Type: ReDIF-Article 1.0 Author-Name: Anders Sørensen Author-X-Name-First: Anders Author-X-Name-Last: Sørensen Title: Inter-industry Wage Differentials and Allocative Inefficiency Abstract: Do inter-industry wage differentials reveal information on allocative inefficiency, implying that reallocation of labor input from low- to high-wage sectors improves aggregate productivity? This question is addressed by introducing wage-weighted averages of sector employment growth in growth regressions using panel data for selected OECD countries over the period 1971-93. For the 1970s, it is found that reallocation of labor between sectors with different wages did not contribute to explaining economic growth, whereas it did for the 1980s. Hence, observable wage differentials only reflect allocative inefficiency after 1980. Journal: International Economic Journal Pages: 1-26 Issue: 1 Volume: 21 Year: 2007 Keywords: Inter-industry wage differentials, growth, X-DOI: 10.1080/10168730601180994 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730601180994 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:1:p:1-26 Template-Type: ReDIF-Article 1.0 Author-Name: Sunwoong Kim Author-X-Name-First: Sunwoong Author-X-Name-Last: Kim Author-Name: Yoon-Ha Yoo Author-X-Name-First: Yoon-Ha Author-X-Name-Last: Yoo Title: Policies to Reduce Rent Seeking in Controlled Markets Abstract: We analyze the effects of various policies to reduce rent seeking in the controlled market in which buyers have heterogeneous valuation regarding the coveted good. The good is allocated according to the buyer-specific signal ('test score'), which is determined by the quantity of wasteful 'rent seeking' exerted by the buyer. We consider three common forms of market control: minimum qualification score, quota, and price ceiling. The potential buyers with higher valuations are more likely to receive the good in equilibrium, while they exert more rent-seeking efforts. Marginally relaxing market control does not necessarily decrease the aggregated amount of rent-seeking activities, and the effectiveness of policy measures usually depends on the current degree of competitiveness in the market. Journal: International Economic Journal Pages: 27-47 Issue: 1 Volume: 21 Year: 2007 Keywords: Rent seeking, screening, contest, quota, price control, X-DOI: 10.1080/10168730601180853 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730601180853 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:1:p:27-47 Template-Type: ReDIF-Article 1.0 Author-Name: Namhoon Kwon Author-X-Name-First: Namhoon Author-X-Name-Last: Kwon Title: Entry Invitations in a Market with Network Effects Abstract: This paper reinvestigates the well-known claim by Economides (1996) that the network effects can lead a monopolist to give away its technology for free. This so-called 'open' strategy is likely to be adopted when marginal network effects are strong but not too strong relative to marginal price effects. Highly elastic demand and highly convex costs also increase the likelihood of such a strategy. I first study the case in which the post-entry market structure is of the Cournot type and later compare the results with the Stackelberg case. Journal: International Economic Journal Pages: 49-59 Issue: 1 Volume: 21 Year: 2007 Keywords: Network effects, open strategy, Cournot, Stackelberg, X-DOI: 10.1080/10168730601180879 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730601180879 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:1:p:49-59 Template-Type: ReDIF-Article 1.0 Author-Name: Chul Chung Author-X-Name-First: Chul Author-X-Name-Last: Chung Title: Technological Progress, Terms of Trade, and Monopolistic Competition Abstract: This paper examines welfare implications of technological progress in the new trade model with monopolistic competition. Our result shows that labor-augmenting technological progress turns the terms of trade against the growing country while capital-augmenting technological progress shifts them in favor of the growing country. Unlike the Findlay-Grubert theorem, both technological progresses are welfare-enhancing. The key channel for this welfare effect is the love of variety in the new trade model. Journal: International Economic Journal Pages: 61-70 Issue: 1 Volume: 21 Year: 2007 Keywords: Findlay-Grubert theorem, technological progress, terms of trade, monopolistic competition, welfare, X-DOI: 10.1080/10168730601180887 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730601180887 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:1:p:61-70 Template-Type: ReDIF-Article 1.0 Author-Name: Soyoung Kim Author-X-Name-First: Soyoung Author-X-Name-Last: Kim Author-Name: Sunghyun Henry Kim Author-X-Name-First: Sunghyun Henry Author-X-Name-Last: Kim Title: Financial Panic and Exchange Rate Overshooting during Currency Crises Abstract: During currency crises, some currencies depreciate more than the post-crisis exchange rate level, which can be described as exchange rate overshooting. Previous studies have claimed that a tight monetary policy, represented by an increase in the interest rate, stabilizes an exchange rate by causing currency appreciation, thereby explaining overshooting. This paper tests the hypothesis that overshooting simply reflects the overreaction of investors due to financial panic during currency crises, regardless of subsequent domestic policies. Empirical results suggest that: (1) the positive relationship between monetary tightening and the overshooting measure is very sensitive to sample selection; and (2) the measure of financial panic has a significant and positive relationship with the measure of overshooting in non-European countries. Journal: International Economic Journal Pages: 71-89 Issue: 1 Volume: 21 Year: 2007 Keywords: Currency crisis, financial panic, exchange rate overshooting, X-DOI: 10.1080/10168730601180929 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730601180929 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:1:p:71-89 Template-Type: ReDIF-Article 1.0 Author-Name: Akira Okamoto Author-X-Name-First: Akira Author-X-Name-Last: Okamoto Title: Optimal Tax Combination in an Aging Japan Abstract: This paper searches for a desirable tax combination in the coming aging society. It looks at the Japanese tax and social security systems through an extended life-cycle general equilibrium simulation model and evaluates the macroeconomic and welfare effects of alternative tax policies in an aging Japan. Simulation results show that an increase in the rate of tax on consumption and a decrease in the rate of tax on interest income may be a desirable tax combination under conditions of revenue neutrality, because the combination substantially promotes capital formation and brings with it a significant improvement in social welfare. Journal: International Economic Journal Pages: 91-114 Issue: 1 Volume: 21 Year: 2007 Keywords: Aging population, tax reform, life-cycle general equilibrium model, simulation analysis, X-DOI: 10.1080/10168730601180978 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730601180978 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:1:p:91-114 Template-Type: ReDIF-Article 1.0 Author-Name: Julian Ramajo Author-X-Name-First: Julian Author-X-Name-Last: Ramajo Author-Name: Agustin Garcia Author-X-Name-First: Agustin Author-X-Name-Last: Garcia Author-Name: Montserrat Ferre Author-X-Name-First: Montserrat Author-X-Name-Last: Ferre Title: The Effects of Public Expenditure on Private Consumption: A Disaggregated Analysis for Spain (1970-1997) Abstract: The main purpose of this article is to provide empirical evidence for Spain on the dependency relationship between government spending and private consumption at the disaggregated level. To this end, we will use two approaches that extend traditional consumption models, allowing for non-separability of consumers' preferences between public and private goods and services. The results obtained show significant links between public and private consumption and, in particular, they point towards the importance of carrying out the analysis at the disaggregated level: there is evidence that some components of public and private consumption act as substitutes, whereas others act as complements. Journal: International Economic Journal Pages: 115-131 Issue: 1 Volume: 21 Year: 2007 Keywords: Fiscal policy, private consumption, government spending, Spanish economy, X-DOI: 10.1080/10168730601180838 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730601180838 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:1:p:115-131 Template-Type: ReDIF-Article 1.0 Author-Name: Charalambos Pattichis Author-X-Name-First: Charalambos Author-X-Name-Last: Pattichis Author-Name: Marios Maratheftis Author-X-Name-First: Marios Author-X-Name-Last: Maratheftis Author-Name: Stavros Zenios Author-X-Name-First: Stavros Author-X-Name-Last: Zenios Title: Is the Cyprus Pound Real Effective Exchange Rate Misaligned? A BEER Approach Abstract: This paper investigates whether the real effective exchange rate of the Cyprus pound is misaligned by generating measures of the equilibrium rate using the Behavioral Equilibrium Exchange Rate (BEER) approach. Several measures of the equilibrium exchange rate were derived and used to check for the existence of exchange rate misalignment. The results suggest that, during the 1990s, the actual real effective exchange rate and the various equilibrium measures generated move closely together and there is no evidence of any significant and persistent misalignment. However, the empirical evidence suggests persistent overvaluation during the 1980s. Journal: International Economic Journal Pages: 133-154 Issue: 1 Volume: 21 Year: 2007 Keywords: Equilibrium exchange rates, misalignment, Cyprus pound, X-DOI: 10.1080/10168730601181026 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730601181026 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:1:p:133-154 Template-Type: ReDIF-Article 1.0 Author-Name: Purna Chandra Parida Author-X-Name-First: Purna Chandra Author-X-Name-Last: Parida Author-Name: Pravakar Sahoo Author-X-Name-First: Pravakar Author-X-Name-Last: Sahoo Title: Export-led Growth in South Asia: A Panel Cointegration Analysis Abstract: In this paper, we attempt to examine the export-led and manufacturing export-led growth hypothesis for four South Asian Countries; namely, India, Pakistan, Bangladesh and Sri Lanka, using Pedroni's panel cointegration technique for the period 1980-2002. In this context we estimate growth accounting equations to investigate the impact of exports, manufacturing exports and other important physical and human capital variables on both total GDP and non-export GDP. The study finds long-run equilibrium relationship between GDP (and non-export GDP) and exports along with other variables supporting export-led growth hypothesis. The results also substantiate the existence of manufacturing export-led growth hypothesis. Further, we find that export, fixed capital formation, public expenditure on health and education have statistically significant coefficients re-emphasizing the importance of these variables for higher economic growth. Journal: International Economic Journal Pages: 155-175 Issue: 2 Volume: 21 Year: 2007 Keywords: Exports, economic growth, South-Asia, panel cointegration, X-DOI: 10.1080/10168730701345414 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701345414 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:2:p:155-175 Template-Type: ReDIF-Article 1.0 Author-Name: Wook Sohn Author-X-Name-First: Wook Author-X-Name-Last: Sohn Title: A Theory of Conflicts of Interest in Banking Relationships Abstract: This paper highlights a dark side of banking relationships by elucidating the conditions under which a pre-existing relationship between a lending bank and a borrower can be detrimental to positive valuation effects of loan announcements. The effect of a pre-existing relationship is more likely to be negative when the pre-existing loans are large and firms' screening costs are low. A theoretical model shows that loan announcement's positive effect on borrowers' value due to the standard information advantage can be more than offset by the bank's conflict of interest when the bank's asset quality reputation is poor, i.e. when the probability of the bank holding a bad loan is large. Journal: International Economic Journal Pages: 177-198 Issue: 2 Volume: 21 Year: 2007 Keywords: Conflicts of interest, banking relationships, soft-budget constraint, sequential equilibrium, X-DOI: 10.1080/10168730701345422 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701345422 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:2:p:177-198 Template-Type: ReDIF-Article 1.0 Author-Name: Yemane Wolde-Rufael Author-X-Name-First: Yemane Author-X-Name-Last: Wolde-Rufael Title: Another look at the Relationship between Telecommunications Investment and Economic Activity in the United States Abstract: In a recent issue of this journal, Beil et al. (2005, hereafter, BFJ) examined the relationship between telecommunications investment and economic growth in the United States over the period 1947-1996. Based on results from Granger-Sims test, BFJ conclude that '… investment by telecommunications firms is caused by, but does not cause, economic activity, and the findings are robust across lag lengths'. However, using another version of the Granger causality test due to Toda & Yamamoto (1995) and the same data set transformed into natural logarithms, the evidence in this paper indicates a feedback where there was a bi-directional causality between telecommunications investment and economic growth. This seems to suggest that policies aimed at stimulating the US economy by accelerating investment in the telecommunications sector may be successful. Journal: International Economic Journal Pages: 199-205 Issue: 2 Volume: 21 Year: 2007 Keywords: Telecommunications investment, GDP, modified Granger causality, X-DOI: 10.1080/10168730701345372 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701345372 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:2:p:199-205 Template-Type: ReDIF-Article 1.0 Author-Name: Abhijit Sharma Author-X-Name-First: Abhijit Author-X-Name-Last: Sharma Author-Name: Michael Dietrich Author-X-Name-First: Michael Author-X-Name-Last: Dietrich Title: The Structure and Composition of India's Exports and Industrial Transformation (1980-2000) Abstract: This paper analyses structural change in Indian manufactured exports empirically for 143 (mainly manufacturing) industrial groupings. Trade indices such as Balassa's revealed comparative advantage (RCA) index and variants are used. Detailed econometric analysis is employed to examine structural change. The stability and the process of the intertemporal evolution of the RCA indices is considered. Three technology categories (high technology, medium technology and low technology) are analysed individually. Our results point towards substantial industrial restructuring in manufactured exports. We find evidence of despecialisation within India's manufactured exports for the time period studied, which is consistent with increasing specialisation in a subset of manufactured exports. Journal: International Economic Journal Pages: 207-231 Issue: 2 Volume: 21 Year: 2007 Keywords: India, comparative advantage, manufactured exports, X-DOI: 10.1080/10168730701345471 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701345471 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:2:p:207-231 Template-Type: ReDIF-Article 1.0 Author-Name: Axel Borrmann Author-X-Name-First: Axel Author-X-Name-Last: Borrmann Author-Name: Matthias Busse Author-X-Name-First: Matthias Author-X-Name-Last: Busse Author-Name: Manuel De La Rocha Author-X-Name-First: Manuel Author-X-Name-Last: De La Rocha Title: Consequences of Economic Partnership Agreements between East and Southern African Countries and the EU for Inter- and Intra-regional Integration Abstract: The European Union is currently negotiating Economic Partnership Agreements (EPAs) with six African, Caribbean and Pacific country groupings, aiming at establishing mutual free trade. This paper empirically assesses the impact of the EPAs on trade flows and government revenues for 22 East and Southern African countries and discusses implications for intra-regional integration. The results indicate that while moderate trade effects can be expected, relatively large budget effects are likely to occur in a number of these countries, exposing them to considerable structural and financial adjustment requirements. In addition, EPAs would strengthen the need to consolidate overlapping intra-regional integration schemes. Journal: International Economic Journal Pages: 233-253 Issue: 2 Volume: 21 Year: 2007 Keywords: Economic partnership agreement, EU, ACP countries, East and Southern Africa, X-DOI: 10.1080/10168730701345398 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701345398 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:2:p:233-253 Template-Type: ReDIF-Article 1.0 Author-Name: Edward N. Gamber Author-X-Name-First: Edward N. Author-X-Name-Last: Gamber Author-Name: Amy K. S. Scott Author-X-Name-First: Amy K. S. Author-X-Name-Last: Scott Title: A Threshold Analysis of the Relationship Between Governance and Growth Abstract: Quality of governance has been found to be significant in economic growth. We investigate, using a threshold technique, whether the quality of governance matters equally across all levels of economic development. We find that the quality of governance is most significant for only a subset of relatively poor countries, while education is most significant for the poorest countries, and region is most significant for the wealthiest. Journal: International Economic Journal Pages: 255-278 Issue: 2 Volume: 21 Year: 2007 X-DOI: 10.1080/10168730701345240 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701345240 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:2:p:255-278 Template-Type: ReDIF-Article 1.0 Author-Name: Oscar Afonso Author-X-Name-First: Oscar Author-X-Name-Last: Afonso Author-Name: Paulo B. Vasconcelos Author-X-Name-First: Paulo B. Author-X-Name-Last: Vasconcelos Title: Re-examining International Technological-Knowledge Diffusion Abstract: In the standard models of North-South technological-knowledge diffusion, the larger the initial technological-knowledge gap between countries, the greater the Southern catching up. However, this result does not adjust well to Southern reality as a whole. The purpose of this paper is to demonstrate that the disparity between the theoretical outcome and the empirical findings can be reduced by considering that: (i) the South can only imitate Northern technological knowledge when it is sufficiently close to the Northern frontier; (ii) the advantage of the South's moderate backwardness, together with its imitation capacity, is a mechanism of catching up with the North; and (iii) the Southern catching-up specification can be country specific. In particular, we show that the behavior of the South's relative level of employed human capital affects Southern imitation capacity and depends on the catching-up specifications. Journal: International Economic Journal Pages: 279-296 Issue: 2 Volume: 21 Year: 2007 Keywords: North-South, R&D, Human capital, convergence, numerical computations, X-DOI: 10.1080/10168730701345307 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701345307 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:2:p:279-296 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Pierdzioch Author-X-Name-First: Christian Author-X-Name-Last: Pierdzioch Title: Households' Preferences and Exchange Rate Overshooting Abstract: This paper uses a 'New-Open-Economy Macroeconomic' model to study the effect of a shock to Households' preferences on exchange rate dynamics. The special features of the model are that Households' preferences exhibit a 'catching-up with the Joneses' effect and that international financial markets are imperfectly integrated. Results of numerical simulations of the model demonstrate that these features imply that, in an otherwise standard 'New-Open-Economy Macroeconomic' model, a shock to Households' preferences can give rise to an overshooting of the exchange rate. Journal: International Economic Journal Pages: 297-316 Issue: 2 Volume: 21 Year: 2007 Keywords: Preference shock, financial markets, catching-up with the Joneses, exchange rate overshooting, X-DOI: 10.1080/10168730701345356 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701345356 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:2:p:297-316 Template-Type: ReDIF-Article 1.0 Author-Name: Yothin Jinjarak Author-X-Name-First: Yothin Author-X-Name-Last: Jinjarak Title: On the Causality between Trade Credits and Imports: Evidence and Possible Implication for Trade Penalties on Debt Defaults Abstract: This study investigates the association between trade credits and imports of developing countries. Made available by its creditors, the main function of trade credits is to facilitate cross-border transactions of goods and services. This study finds that the reliance of imports on trade credits varies across regions and income: towards the end of the 1990s, the trade credits to imports ratio ranged from 0.20 for East Asia & the Pacific to 0.87 for Africa, and from 0.24 for high-income countries to 0.79 for low-income countries. Applying panel and cross-country estimation, we find that past trade credits help predict current imports, but past imports do not alter the future path of trade credits. Further, the positive association between trade credits and imports is larger for countries more dependent upon trade credits. The findings support the notion that countries make debt repayments to avoid any potential disruption on the line of trade credits. We also find that the trade credits penalty could materialize within less than two quarters. Journal: International Economic Journal Pages: 317-333 Issue: 3 Volume: 21 Year: 2007 Keywords: Debt repayment, international loans, trade finance, X-DOI: 10.1080/10168730701568304 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701568304 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:3:p:317-333 Template-Type: ReDIF-Article 1.0 Author-Name: Rangan Gupta Author-X-Name-First: Rangan Author-X-Name-Last: Gupta Title: Financial Liberalization and Inflationary Dynamics: An Open Economy Analysis Abstract: This paper analyzes the effects of financial liberalization on inflation. We develop an open economy monetary endogenous growth general equilibrium model, with financial intermediaries subjected to obligatory 'high' reserve ratio, serving as the source of financial repression. When calibrated to four Southern European semi-industrialized countries, namely Greece, Italy, Spain and Portugal, which typically had high reserve requirements, the model indicates a positive inflation-financial repression relationship irrespective of the specification of preferences. But the strength of the relationship obtained from the model is found to be much smaller in size than the corresponding empirical estimates. Journal: International Economic Journal Pages: 335-360 Issue: 3 Volume: 21 Year: 2007 Keywords: Inflation financial markets and the macroeconomy, X-DOI: 10.1080/10168730701541228 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701541228 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:3:p:335-360 Template-Type: ReDIF-Article 1.0 Author-Name: A. K. M. Azhar Author-X-Name-First: A. K. M. Author-X-Name-Last: Azhar Author-Name: Robert J. R. Elliott Author-X-Name-First: Robert J. R. Author-X-Name-Last: Elliott Title: Trade and Specialisation in Pollution Intensive Industries: North-South Evidence Abstract: The pollution haven hypothesis (PHH) and the capital-labour hypothesis (KLH) state that the relative level of a country's environmental regulations and capital and labour endowments determines its comparative advantage respectively. Since these hypotheses lead to conflicting predictions as to whether the North or the South will specialise in pollution-intensive production, this paper examines whether changes in trade and specialisation patterns allow us to distinguish between pollution haven and factor endowment effects. We employ a methodology that enables us to present North-South trade patterns over time and to identify those periods when trade patterns were consistent with either the PHH and/or the KLH as a foundation for undertaking more detailed econometric studies. Journal: International Economic Journal Pages: 361-380 Issue: 3 Volume: 21 Year: 2007 Keywords: Pollution Haven Hypothesis, trade box, specialisation, X-DOI: 10.1080/10168730701529926 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701529926 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:3:p:361-380 Template-Type: ReDIF-Article 1.0 Author-Name: Carmen D. Alvarez-Albelo Author-X-Name-First: Carmen D. Author-X-Name-Last: Alvarez-Albelo Author-Name: Monica Pigem-Vigo Author-X-Name-First: Monica Author-X-Name-Last: Pigem-Vigo Title: Quality of Imports Relative to Exports, and the Transmission of Sustained Growth through the Terms of Trade Abstract: This paper shows that an economy can import sustained growth, in spite of not possessing mechanisms to absorb foreign knowledge. To do that, it develops a two-country model of exogenous growth with investment-specific technological change. In autarky, one country sustainably grows while the other economy remains stagnant. In the trade situation, the quality-adjusted terms of trade become increasingly favourable to the second economy, which results in the transmission of growth. The continuous improvement in the quality of imported capital goods relative to exported consumption goods is the reason why this occurs. Moreover, this mechanism leads to convergence in per capita income if trade involves incomplete specialisation. Journal: International Economic Journal Pages: 381-398 Issue: 3 Volume: 21 Year: 2007 Keywords: Trade, terms of trade, quality-adjusted prices, growth transmission, convergence, X-DOI: 10.1080/10168730701520537 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701520537 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:3:p:381-398 Template-Type: ReDIF-Article 1.0 Author-Name: Pei-Cheng Liao Author-X-Name-First: Pei-Cheng Author-X-Name-Last: Liao Title: International R&D Rivalry with Spillovers and Policy Cooperation in R&D Subsidies and Taxes Abstract: We have investigated non-cooperative and jointly optimal R&D policies in the framework of Spencer & Brander (1983) in the presence of R&D spillovers. When R&D activities are strategic substitutes and the R&D game exhibits a positive externality, the result of Spencer & Brander (1983) reverses: the non-cooperative policy is a tax while the jointly optimal policy is a subsidy. Moreover, when R&D activities are strategic complements, the usual result of the prisoners' dilemma in the strategic subsidy game does not hold, implying that a welfare intervention is preferable over laissez-faire. When spillovers are sufficiently large, the joint welfare increases with subsidies being higher than those under non-cooperation. Journal: International Economic Journal Pages: 399-417 Issue: 3 Volume: 21 Year: 2007 Keywords: R&D spillovers, R&D subsidy/tax, strategic substitutes/complements, externality, X-DOI: 10.1080/10168730701520545 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701520545 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:3:p:399-417 Template-Type: ReDIF-Article 1.0 Author-Name: Benhua Yang Author-X-Name-First: Benhua Author-X-Name-Last: Yang Title: Autocracy, Democracy, and FDI Inflows to the Developing Countries Abstract: This paper investigates the relationship between political regimes and Foreign Direct Investment (FDI) inflows to the developing countries for a sample of 134 countries over the 1983-2002 period. Using two categorical measures of regime type and three different measures of FDI, this study finds that, regardless of the measures of regime type, democracies are not significantly associated with either FDI in level or FDI as a ratio to GDP; democracy is positively related to a higher level of per capita FDI, but this result is not robust to alternative measures of political regime. Taken as a whole, there is no evidence of a systematic relationship between democracy and FDI inflows. This result suggests that being a democracy does not help attract higher levels of FDI. Journal: International Economic Journal Pages: 419-439 Issue: 3 Volume: 21 Year: 2007 Keywords: Autocracy, democracy, regime, foreign direct investment, developing countries, X-DOI: 10.1080/10168730601027179 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730601027179 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:3:p:419-439 Template-Type: ReDIF-Article 1.0 Author-Name: James Rude Author-X-Name-First: James Author-X-Name-Last: Rude Author-Name: Jean-Philippe Gervais Author-X-Name-First: Jean-Philippe Author-X-Name-Last: Gervais Title: An Analysis of a Rules-based Approach to Disciplining Export Credits in Agriculture Abstract: This paper examines the comparative static effects of rules-based disciplines for government supported export credit arrangements. The arrangements provide traders in the country offering the guarantees more favourable borrowing conditions. This may provide an advantage relative to rival exporters since the supported trader may offer better financial terms to importers. Rules that discipline implicit interest rate subsidies are appropriate when an importing country does not face liquidity constraints when borrowing. However, these rules may not be appropriate with liquidity constraints because of the potential for additionality and benefits for all exporting countries. Rules on benchmarks for insurance premiums are always appropriate because insurance subsidies unambiguously have the potential to distort markets. Journal: International Economic Journal Pages: 441-463 Issue: 3 Volume: 21 Year: 2007 Keywords: Export credit, WTO agreement on agriculture, export subsidy, X-DOI: 10.1080/10168730601027195 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730601027195 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:3:p:441-463 Template-Type: ReDIF-Article 1.0 Author-Name: MD. Akhtaruzzaman Author-X-Name-First: MD. Author-X-Name-Last: Akhtaruzzaman Title: Globalization, Financial Liberalization and the Behavior of the Long Run Money Demand in the Bangladesh Economy Abstract: The paper estimates the long run demand for money function in the Bangladesh economy using cointegration and the Vector Error Correction Modeling (VECM) technique. The cointegration results suggest that although the process of globalization has shown no significant impact on money demand by the fact that the foreign interest rate is seen as statistically not significant, the financial liberalization has an important impact, reflected in the statistically significant role of domestic interest rate, in influencing both M1 and M2 money demand. An estimate of VECMs also reveals the fact that the short run speed of adjustment is moderately influenced by the financial reform measures to establish the long run relation between money balances, income and domestic interest rates. The phenomenon of credit constraint in the context of a developing country has shown no significant role in influencing money demand, which may imply that the stage of financial development is getting higher level in the Bangladesh economy. The existence of exchange rate depreciation in the cointegration relation with the expected sign suggests that currency substitution is now effective in the monetary sector and, therefore, its impact should be considered in the Bangladesh monetary policy matrix. Journal: International Economic Journal Pages: 465-490 Issue: 3 Volume: 21 Year: 2007 Keywords: Demand for money, financial liberalization, financial reforms, asset substitutability, currency substitution, X-DOI: 10.1080/10168730601027153 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730601027153 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:3:p:465-490 Template-Type: ReDIF-Article 1.0 Author-Name: Felipa De Mello-Sampayo Author-X-Name-First: Felipa Author-X-Name-Last: De Mello-Sampayo Title: The Location of the United States' FDI Under the Share Gravity Model Abstract: This paper examines the geographical distribution of US MNEs FDI using the share gravity model, which adds a competition factor to the classical gravity formulation. The aim is to show that, unlike previous applications of the gravity model to FDI, the share of FDI pertaining to a location is determined not only by its own characteristics but also by those of competing locations. A dynamic share gravity model is estimated for a panel of both industrialised and developing countries using five alternative measures of FDI. The results vindicate the superiority of the share relative to the classical version of the gravity model in that the competition factor has a significantly negative impact on the FDI share. Journal: International Economic Journal Pages: 491-519 Issue: 4 Volume: 21 Year: 2007 Keywords: Foreign Direct Investment, multinational enterprises, gravity model, dynamic panel data model, X-DOI: 10.1080/10168730701529942 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701529942 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:4:p:491-519 Template-Type: ReDIF-Article 1.0 Author-Name: Saade Chami Author-X-Name-First: Saade Author-X-Name-Last: Chami Author-Name: Selim Elekdag Author-X-Name-First: Selim Author-X-Name-Last: Elekdag Author-Name: Ivan Tchakarov Author-X-Name-First: Ivan Author-X-Name-Last: Tchakarov Title: What are the Potential Economic Benefits of Enlarging the Gulf Cooperation Council? Abstract: This paper uses a variant of the IMF's Global Economy Model (GEM) to estimate the macroeconomic benefits of Yemen's accession into the Gulf Cooperation Council (GCC). After calibrating the model to Yemen and the GCC block, several simulations are carried out to estimate the potential impact of economic integration on both regions. The paper draws two fundamental conclusions. First, regional integration enhances competition which produces large economic benefits for both Yemen and the GCC. In particular, we show that in some cases economic integration can increase GDP in Yemen by up to 14% and in the GCC by up to 7% over the long run. Second, even if market structures do not improve substantially, GCC enlargement can still generate substantial spillover gains in each block. More specifically, one measure of economic prosperity measured by consumption can increase by up to 7% in Yemen and up to 8% in the GCC. Journal: International Economic Journal Pages: 521-548 Issue: 4 Volume: 21 Year: 2007 Keywords: Regional integration, competition, IMF's Global Economy Model (GEM), X-DOI: 10.1080/10168730701699059 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701699059 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:4:p:521-548 Template-Type: ReDIF-Article 1.0 Author-Name: Jose Mendez-Naya Author-X-Name-First: Jose Author-X-Name-Last: Mendez-Naya Title: Strategic Distortion of the Objectives of Trade Policy Abstract: By employing a simple three-country model in which there are two exporting countries and one consuming country, this paper analyses the consequences of one-country strategic distortion of the objectives of trade policy. It finds that although an exporting country can benefit from strategic distortion, it would be preferred that the importing country distorts its policy. Furthermore, it is found that preferential trading agreements can emerge endogenously. Journal: International Economic Journal Pages: 549-557 Issue: 4 Volume: 21 Year: 2007 Keywords: Trade policy, economic integration, commitment, distortion of objective functions, X-DOI: 10.1080/10168730701698978 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701698978 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:4:p:549-557 Template-Type: ReDIF-Article 1.0 Author-Name: Stephanos Papadamou Author-X-Name-First: Stephanos Author-X-Name-Last: Papadamou Author-Name: Georgios Oikonomou Author-X-Name-First: Georgios Author-X-Name-Last: Oikonomou Title: The Monetary Transmission Mechanism: Evidence from Eight Economies in Transition Abstract: We examine in this paper the importance of banks' behavior in the transmission of the monetary policy to the real economy. Monthly data from eight economies in transition that recently became members of the European Union and the techniques of cointegration and Error Correction models are used, in order to investigate the relationship between intermediation margin spread (IMS, official lending rate minus deposit rate) and industrial production. Given the low development of corporate bond market and the dependence of non-financial agents on banking credits, we find that in many countries the IMS is an important leading indicator of industrial production. However, in countries characterized by credit access constraints (Estonia and Latvia) evidence for the traditional money channel is found. Evidence for both money and credit channels is found in Poland and Hungary. These results imply that a common monetary policy implemented by the European Central Bank may be transmitted in different ways across the new members of the enlarged European Union with different effects on real output in each country. Journal: International Economic Journal Pages: 559-576 Issue: 4 Volume: 21 Year: 2007 Keywords: Monetary policy, transmission mechanism, credit channel, VAR/VEC models, X-DOI: 10.1080/10168730701698887 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701698887 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:4:p:559-576 Template-Type: ReDIF-Article 1.0 Author-Name: Hakan Berument Author-X-Name-First: Hakan Author-X-Name-Last: Berument Author-Name: Nazli Konac Author-X-Name-First: Nazli Author-X-Name-Last: Konac Author-Name: Ozge Senay Author-X-Name-First: Ozge Author-X-Name-Last: Senay Title: Openness and the Effectiveness of Monetary Policy: A Cross-country Analysis Abstract: This paper evaluates the relationship between a country's openness to trade and the effectiveness of monetary policy in changing output growth and inflation in 29 different countries. Using quarterly data from the 1957-2003 period, empirical estimates based on individual country specifications show that the direction, significance and nature of the relationship between openness and the effectiveness of monetary policy on output growth as well as inflation vary considerably across countries. Journal: International Economic Journal Pages: 577-591 Issue: 4 Volume: 21 Year: 2007 Keywords: Openness, monetary policy, X-DOI: 10.1080/10168730701699018 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701699018 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:4:p:577-591 Template-Type: ReDIF-Article 1.0 Author-Name: Haiwen Zhou Author-X-Name-First: Haiwen Author-X-Name-Last: Zhou Title: Factor Endowment, the Choice of Technology, and the Volume of Trade Abstract: This paper studies impacts of factor endowment on international trade in a general equilibrium model in which firms choose their technologies endogenously. Although countries only differ in factor endowment ex ante, countries may also differ in their chosen technologies. If industries choose different capital-labor intensities in equilibrium, the Heckscher-Ohlin theorem, factor price equalization theorem, the Rybczynski theorem, and the Stolper-Samuelson theorem hold. If industries choose the same capital-labor intensity in equilibrium, the volume of trade is zero. None of the four theorems applies. Journal: International Economic Journal Pages: 593-611 Issue: 4 Volume: 21 Year: 2007 Keywords: Choice of technology, factor endowment, factor price equalization, Heckscher-Ohlin model, volume of trade, X-DOI: 10.1080/10168730701699075 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701699075 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:4:p:593-611 Template-Type: ReDIF-Article 1.0 Author-Name: Andrea Mangani Author-X-Name-First: Andrea Author-X-Name-Last: Mangani Title: Measuring Variety and Quality of Products with Trademarks Abstract: The variety and quality of products has a great importance in the analysis of international trade flows. Several theoretical models show that larger and richer economies produce and export goods characterized by higher variety and quality. Accordingly, empirical studies have tried to quantify this relationship by investigating directly the composition of trade. In this paper we propose the use of trademarks to estimate the variety and quality of goods and services. We consider the Community trademark applications filed by 120 countries and distinguish the variety of the underlying products across classes (extensive margin) from the variety within classes (intensive margin). Then we estimate the quality of a country's goods and services observing how much its trademarks are extended on multiple classes (quality margin). The empirical analysis consists of simple cross-sections of the 'applicant' countries. The extensive margin is found to account for about 40% of the higher number of entries of larger and richer economies, while differences in quality seem to explain about 10% of national differences in trademark applications. These findings partially confirm those of previous empirical studies, although the nature of the data and the methods of classification lead to some quantitative discrepancies and to a different interpretation of the results. Journal: International Economic Journal Pages: 613-631 Issue: 4 Volume: 21 Year: 2007 Keywords: Trademarks, product variety, product quality, international trade, X-DOI: 10.1080/10168730701699109 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701699109 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:4:p:613-631 Template-Type: ReDIF-Article 1.0 Author-Name: Beiling Yan Author-X-Name-First: Beiling Author-X-Name-Last: Yan Title: International Trade as Determined by Income and Income Distribution Abstract: In standard trade theory, consumption is normally assumed to be homothetic. Consequently, income and its distribution have no role in determining international trade patterns. This paper examines the assumption and its implications. The assumption of homothetic preferences is rejected at the 1% level. It further demonstrates that the Heckscher-Ohlin-Vanek (HOV) model modified by allowing for non-homothetic taste improves the performance of HOV prediction and explains some of the trade puzzles and paradoxes. Journal: International Economic Journal Pages: 633-651 Issue: 4 Volume: 21 Year: 2007 Keywords: Income distribution, homothetic preference, international trade, factor content of trade, X-DOI: 10.1080/10168730701699141 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730701699141 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:21:y:2007:i:4:p:633-651 Template-Type: ReDIF-Article 1.0 Author-Name: Manouchehr Mokhtari Author-X-Name-First: Manouchehr Author-X-Name-Last: Mokhtari Author-Name: Doha Abdelhamid Author-X-Name-First: Doha Author-X-Name-Last: Abdelhamid Title: Neocapture: regulatory competition in an open market world Abstract: This paper shows that inter-regulatory competition can have powerful pro-consumer effects in an open economy world even when the consumers have little political influence. These findings overturn the welfare implications of capture theories that show that regulators do not vigorously pursue public interests. The paper also points to the kinds of markets where the political competition has more or less powerful effects (fixed cost technology case). Since markets have become more integrated over time, there are obvious implications for the evolution of regulation. Journal: International Economic Journal Pages: 1-24 Issue: 1 Volume: 22 Year: 2008 Keywords: globalization, regulatory competition, regulatory collusion, capture theory, economic theory of regulation, game theory, X-DOI: 10.1080/10168730801886812 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730801886812 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:1:p:1-24 Template-Type: ReDIF-Article 1.0 Author-Name: Vasilios Kosteas Author-X-Name-First: Vasilios Author-X-Name-Last: Kosteas Title: Foreign direct investment and productivity spillovers: a quantile analysis Abstract: This paper estimates the within-plant and spillover productivity effects of foreigninvestment in Mexican manufacturing plants. It contributes to the existing literature by analyzing whether FDI of North American origin differs from FDI from the rest of the world. I also use quantile regression analysis to determine whether spillovers are equal for plants of different productivity levels. The results indicate positive and significant spillovers from the presence of foreign firms. However, these spillovers accrue only to plants at the upper end of the productivity distribution. Furthermore, North American based FDI appears to yield slightly larger spillovers relative to FDI from the rest of the world; however the difference is not statistically significant. A deeper look at this issue reveals that Canadian FDI yields large productivity spillovers relative to both US and rest of the world FDI. These differences are highly statistically significant. Journal: International Economic Journal Pages: 25-41 Issue: 1 Volume: 22 Year: 2008 Keywords: foreign direct investment, productivity, spillovers, Mexico, X-DOI: 10.1080/10168730801886929 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730801886929 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:1:p:25-41 Template-Type: ReDIF-Article 1.0 Author-Name: Marcelo Sanchez Author-X-Name-First: Marcelo Author-X-Name-Last: Sanchez Title: The link between interest rates and exchange rates: do contractionary depreciations make a difference? Abstract: This paper revisits the relationship between interest rates and exchange rates using a simple model that incorporates the role of exchange rate pass-through into domestic prices and distinguishes between cases of expansionary and contractionary depreciations. The model results show that the correlation between exchange rates and interest rates, conditional on an adverse risk premium shock, is negative for expansionary depreciations and positive for contractionary ones. For this type of shock, interest rates are found to be raised to prevent the contractionary effect of a depreciation regardless of whether the latter effect is strong or mild. Interest rates are predicted to eventually rise in response to an adverse net export shock in contractionary depreciation cases, and to be lowered in the case of expansionary ones. Journal: International Economic Journal Pages: 43-61 Issue: 1 Volume: 22 Year: 2008 Keywords: transmission mechanism, emerging market economies, exchange rate, monetary policy, X-DOI: 10.1080/10168730801898981 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730801898981 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:1:p:43-61 Template-Type: ReDIF-Article 1.0 Author-Name: Petri Maki-Franti Author-X-Name-First: Petri Author-X-Name-Last: Maki-Franti Title: Money and stock returns: is there habit formation for holding liquid assets? Abstract: Assuming a utility function, which is non-separable in money and consumption, we derive a simple, non-linear asset pricing model, according to which investors' willingness to hold liquid assets in their portfolio can be described by a sort of habit formation. The parameters of the empirical model derived from our theoretical model are estimated with the Smooth Transition Regression (STR) models for the US data. The results of our econometric exercise to test the hypothesis of habit formation remain mixed, but we find evidence that supports some existing, related attempts to explain stock returns by the liquidity of the economy relative to investors' target level for liquidity. Journal: International Economic Journal Pages: 63-80 Issue: 1 Volume: 22 Year: 2008 Keywords: asset pricing models, liquidity, X-DOI: 10.1080/10168730801886945 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730801886945 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:1:p:63-80 Template-Type: ReDIF-Article 1.0 Author-Name: Dale Squires Author-X-Name-First: Dale Author-X-Name-Last: Squires Author-Name: Christopher Reid Author-X-Name-First: Christopher Author-X-Name-Last: Reid Author-Name: Yongil Jeon Author-X-Name-First: Yongil Author-X-Name-Last: Jeon Title: Productivity growth in natural resource industries and the environment: an application to the Korean tuna purse-seine fleet in the Pacific Ocean Abstract: Measures of multifactor productivity growth in natural resource industries are misleading without accounting for the effects on the environment. This paper introduces environmental effects into an output-oriented Malmquist index of multifactor productivity growth in order to evaluate growth in productivity and technical efficiency for Korean purse seine vessels fishing for tuna in the Western and Central Pacific Ocean. Journal: International Economic Journal Pages: 81-93 Issue: 1 Volume: 22 Year: 2008 Keywords: productivity, technical change, environment, natural resources, Malmquist index, Pacific tuna fisheries, Korea, X-DOI: 10.1080/10168730801886978 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730801886978 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:1:p:81-93 Template-Type: ReDIF-Article 1.0 Author-Name: Pontus Braunerhjelm Author-X-Name-First: Pontus Author-X-Name-Last: Braunerhjelm Author-Name: Per Thulin Author-X-Name-First: Per Author-X-Name-Last: Thulin Title: Can countries create comparative advantages? R&D expenditures, high-tech exports and country size in 19 OECD countries, 1981-1999 Abstract: This paper analyses how increased R&D expenditures and market size influence the distribution of comparative advantage. Previous studies report ambiguous results and also refer to periods when markets where much more segmented and production factors less mobile. The empirical analysis comprises 19 OECD-countries and spans the period 1981 to 1999. It is shown how an increase in R&D-expenditures by one percentage point implies a three-percentage point increase in high-technology exports, whereas market size fails to attain significance. In addition, institutional factors influence the dynamics of comparative advantage. Journal: International Economic Journal Pages: 95-111 Issue: 1 Volume: 22 Year: 2008 Keywords: dynamic comparative advantage, R&D, market size, institutions, X-DOI: 10.1080/10168730801887026 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730801887026 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:1:p:95-111 Template-Type: ReDIF-Article 1.0 Author-Name: Chee Wooi Hooy Author-X-Name-First: Chee Wooi Author-X-Name-Last: Hooy Title: Does trade regionalism increase stock market segmentation within a trading bloc? Abstract: Whether trade regionalism remains a stumbling block to economic globalization remains a debatable issue. This paper investigates the impact of trade regionalism on stock market segmentation for the case of AFTA, EU and NAFTA. We exploit the pricing error of the trading-bloc capital asset pricing model (TB-CAPM) as an indicator for stock market segmentation based on Akdogan (1992) and Adler and Qi (2003). We use intra-trade ratio as the indicator for trade regionalism. Controlling for other determinants for market integration, evidence is found that trade regionalism helps to explain stock market segmentation in EU and NAFTA, which are both dominated by developed countries. For NAFTA, the higher the intra-trade ratio the lower the degree of market segmentation within the trading bloc. For EU however, the intra-trade ratio contributes to higher stock market segmentation. Journal: International Economic Journal Pages: 113-126 Issue: 1 Volume: 22 Year: 2008 Keywords: stock market segmentation, trade regionalism, TB-CAPM, intra-trade ratio, X-DOI: 10.1080/10168730801887083 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730801887083 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:1:p:113-126 Template-Type: ReDIF-Article 1.0 Author-Name: Pan-Long Tsai Author-X-Name-First: Pan-Long Author-X-Name-Last: Tsai Author-Name: Ching-Lung Tsay Author-X-Name-First: Ching-Lung Author-X-Name-Last: Tsay Title: Outward foreign direct investment and inward international labor migration: substitutes or complements? Abstract: Motivated by the positive relationship between outward FDI and inward ILM observed in Taiwan in the 1990s, this study proposed a formal model to explain the phenomenon. With deterioration in international competitiveness owing to a continuing rise in the domestic wage rate and/or appreciation of the domestic currency, it was shown that relocating production abroad is a natural reaction by manufacturing firms unless a sufficient number of guest workers can be imported. As the importation of labor was restricted to a level lower than that required for maintaining international competitiveness, a simultaneous increase in outward FDI and inward ILM would appear. When labor inflows are limited, importing guest workers can lead to more employment of the domestic labor if the demand for labor is sufficiently elastic. Journal: International Economic Journal Pages: 127-139 Issue: 1 Volume: 22 Year: 2008 Keywords: foreign direct investment, international labor migration, guest workers, X-DOI: 10.1080/10168730801887125 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730801887125 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:1:p:127-139 Template-Type: ReDIF-Article 1.0 Author-Name: Ricardo Hausmann Author-X-Name-First: Ricardo Author-X-Name-Last: Hausmann Author-Name: Maya Horii Author-X-Name-First: Maya Author-X-Name-Last: Horii Author-Name: Federico Sturzenegger Author-X-Name-First: Federico Author-X-Name-Last: Sturzenegger Title: The growing current account surpluses in East Asia: the effect of dark matter assets Abstract: In a series of papers we have developed the notion that net foreign assets could be better approximated by capitalizing the net investment income line of the balance of payments statistics. Hidden assets or changes in financial costs may change the net return of net foreign assets even when the valuation of assets remains unchanged. By capitalizing the net investment income a more realistic picture emerges on the true burden or return of net foreign assets. This paper estimates external positions for East Asian economies using this methodology and compares the results with that of official accounts. We find that, until the late 1990s, net investment income increased relatively little, signaling that net foreign assets had not grown as suggested by the large current account surpluses of these countries. This is consistent with the fact that the region had attracted large amounts of foreign direct investment, for which the transfer of technology and knowledge are not accurately captured by the valuation of the foreign asset position. Since 2002, however, the trend has reversed, indicating much larger surpluses than officially registered. We discuss individual country cases. Journal: International Economic Journal Pages: 141-161 Issue: 2 Volume: 22 Year: 2008 Keywords: current account imbalances, dark matter, east Asia, X-DOI: 10.1080/10168730802079581 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802079581 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:2:p:141-161 Template-Type: ReDIF-Article 1.0 Author-Name: Jurgen Von Hagen Author-X-Name-First: Jurgen Author-X-Name-Last: Von Hagen Author-Name: Jizhong Zhou Author-X-Name-First: Jizhong Author-X-Name-Last: Zhou Title: The interaction between capital controls and exchange rate regimes: evidence from developing countries Abstract: This paper provides an empirical analysis of the interaction between capital controls and exchange rate policies in developing countries in the 1980s and 1990s. We estimate a simultaneous-equations panel mixed logit model for the joint determination of two decisions. We find strong influences from de jure exchange rate regimes on capital account policies but somewhat weaker feedback impacts. With de facto exchange rate regimes the influences in both directions are similar to each other. Journal: International Economic Journal Pages: 163-185 Issue: 2 Volume: 22 Year: 2008 Keywords: capital controls, exchange rate regimes, simultaneous equations model, panel mixed logit model, X-DOI: 10.1080/10168730802079698 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802079698 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:2:p:163-185 Template-Type: ReDIF-Article 1.0 Author-Name: Stefan Norrbin Author-X-Name-First: Stefan Author-X-Name-Last: Norrbin Author-Name: Onsurang Pipatchaipoom Author-X-Name-First: Onsurang Author-X-Name-Last: Pipatchaipoom Author-Name: Lilla Bors Author-X-Name-First: Lilla Author-X-Name-Last: Bors Title: How robust is the natural resource curse? Abstract: Prior research has found that countries rich in resources grow slower than countries with few natural resources. This paper re-examines the natural resource curse using updated data. In addition, the robustness of the results to various sample choices is investigated. The resource curse appears to be sensitive to the sample of countries used in the regression. In fact, eliminating a single country eliminates the significance of the curse. However, extending the methodology to allow for variation of the growth rate across decades improves the robustness of the negative effect of natural resources on the growth rate. Journal: International Economic Journal Pages: 187-200 Issue: 2 Volume: 22 Year: 2008 Keywords: growth, natural resources, parameter robustness, jack-knifing, X-DOI: 10.1080/10168730802079722 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802079722 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:2:p:187-200 Template-Type: ReDIF-Article 1.0 Author-Name: Song-Ken Hsu Author-X-Name-First: Song-Ken Author-X-Name-Last: Hsu Author-Name: Ming-Fang Tsai Author-X-Name-First: Ming-Fang Author-X-Name-Last: Tsai Author-Name: Chih-Hai Yang Author-X-Name-First: Chih-Hai Author-X-Name-Last: Yang Title: Market structure, external exposure and industry profitability: evidence from taiwan Abstract: This article aims to investigate empirically the influences of concentration, exports, and exchange rate on industry profitability in a small open economy, in Taiwan. Developing a simple theoretical framework and utilizing panel data of four-digit manufacturing industries over the period 1986-96 to test our findings indicate that concentration has a positive impact on profit margin, while the impacts of export intensity and external exposure are significantly negative. This result indicates that export-intensive industries tend to have a lower profitability in Taiwan, because export firms act as price takers in international markets. Moreover, the exchange rate is found to have a relatively strong and significant effect on industry profitability, whereby the devaluation of the New Taiwan Dollar hurts more those industries with a higher share of imported inputs during the sample period. Journal: International Economic Journal Pages: 201-214 Issue: 2 Volume: 22 Year: 2008 Keywords: concentration, export, exchange rate, industry profitability, X-DOI: 10.1080/10168730802079805 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802079805 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:2:p:201-214 Template-Type: ReDIF-Article 1.0 Author-Name: Jui-Chuan Chang Author-X-Name-First: Jui-Chuan Author-X-Name-Last: Chang Title: The credit channel of monetary transmission in a small open economy Abstract: This paper studies the credit channel of monetary transmission in a small open economy. We develop a simple general equilibrium model by extending Bernanke and Blinder's (1988) CC-LM framework and Edwards and Vegh's (1997) banking specification. Under a floating exchange rate regime and with imperfect capital mobility, we establish that bank-lending behavior may amplify, neutralize or attenuate the impact of monetary policy on output, price and the nominal exchange rate as compared to the standard interest rate channel. An important explanatory factor is the sensitivity of banks and firms to loans and market interest rates. This examination is important to consider in light of the standard AD-AS model at the policy-making level, and in light of recent empirical evidence regarding the credit channel as an important element of the monetary transmission mechanism. Journal: International Economic Journal Pages: 215-230 Issue: 2 Volume: 22 Year: 2008 Keywords: credit channel, monetary transmission, open economy, X-DOI: 10.1080/10168730802079938 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802079938 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:2:p:215-230 Template-Type: ReDIF-Article 1.0 Author-Name: Donggyun Shin Author-X-Name-First: Donggyun Author-X-Name-Last: Shin Author-Name: Kwanho Shin Author-X-Name-First: Kwanho Author-X-Name-Last: Shin Title: Fluctuations of unemployment and inter- and intra-sectoral reallocations of workers Abstract: This paper investigates how both inter- and intra-sectoral reallocations of workers contribute to fluctuations in the aggregate unemployment rate. On the basis of the Panel Study of Income Dynamics (PSID) data for the 1986-96 period, we construct a monthly longitudinal data set that enables us to track each individual's experience of unemployment duration as well as labor movement across and within sectors. This data set shows strong evidence that inter-sectoral reallocations of workers play a major role in explaining fluctuations in the unemployment rate at the business cycle frequency. While the number of intra-sectoral movers is generally greater and more countercyclical than that of inter-sectoral movers, the longer duration of unemployment of the latter enables the impact of inter-sectoral movements to be more pronounced in explaining fluctuations in the unemployment rate. Moreover, the asymmetric effects that increase, rather than decrease, in unemployment are by far better explained by inter-sectoral movers, which suggests that high unemployment is closely associated with inter-sectoral reallocations of workers. Journal: International Economic Journal Pages: 231-251 Issue: 2 Volume: 22 Year: 2008 Keywords: fluctuations of unemployment, sectoral shocks, sectoral reallocations, duration of unemployment, X-DOI: 10.1080/10168730802079979 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802079979 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:2:p:231-251 Template-Type: ReDIF-Article 1.0 Author-Name: Chulhee Lee Author-X-Name-First: Chulhee Author-X-Name-Last: Lee Title: Rising family income inequality in the United States, 1968-2000: impacts of changing labor supply, wages, and family structure Abstract: This study estimates what fraction of the rise in family income inequality in the United States between 1968 and 2000 is accounted for by the change in each of the family income components, such as wages, employment, hours of work of family heads and spouses, family structure, and other incomes. The increased disparities in other incomes and labor supply account for 29% and 28%, respectively, of the rise in the difference in incomes between the top 10% and bottom 10% families. Structural changes in wages, largely regarded as the major culprit for the increase in income inequality, explain less than a quarter of the rise in the measure of family income inequality. Changing fractions of families with both husband and wife and changes in the composition of the income sources account for 11% and 16%, respectively, of the widening income gap. The relative importance of the effect of changing labor supply declined over time, while that of wage changes increased. For the upper half of the income distribution, wage changes were the dominant cause of the increase in the gap between the richest 10th and middle-income families. In sharp contrast, changes in labor supply and other incomes were the principal causes of the growing distance between the poor and middle-income families for the lower half of the income distribution. Journal: International Economic Journal Pages: 253-272 Issue: 2 Volume: 22 Year: 2008 Keywords: income distribution, inequality, employment, hours of work, wage, X-DOI: 10.1080/10168730802080001 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802080001 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:2:p:253-272 Template-Type: ReDIF-Article 1.0 Author-Name: Salah Nusair Author-X-Name-First: Salah Author-X-Name-Last: Nusair Title: Testing for the Fisher hypothesis under regime shifts: an application to Asian countries Abstract: Previous empirical studies on the Fisher hypothesis have focused on developed countries, thus leaving developing countries with no or very few studies. This paper tests the validity of the hypothesis for six Asian countries over the period 1978-2005 using a cointegration procedure developed by Gregory and Hansen (1996) that allows for the presence of a one-time endogenously determined structural break in the cointegrating vector. The results indicate evidence in favor of the Fisher hypothesis for only Korea and Singapore after allowing for a regime shift and for Malaysia and Thailand with no evidence of regime shift. The results indicate the presence of the full Fisher effect for Korea and the partial effect for Malaysia, Singapore, and Thailand. Journal: International Economic Journal Pages: 273-284 Issue: 2 Volume: 22 Year: 2008 Keywords: Fisher hypothesis, regime shift, cointegration, residual-based tests, X-DOI: 10.1080/10168730802095660 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802095660 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:2:p:273-284 Template-Type: ReDIF-Article 1.0 Author-Name: Rosaria Rita Canale Author-X-Name-First: Rosaria Rita Author-X-Name-Last: Canale Author-Name: Alberto Montagnoli Author-X-Name-First: Alberto Author-X-Name-Last: Montagnoli Author-Name: Oreste Napolitano Author-X-Name-First: Oreste Author-X-Name-Last: Napolitano Title: Speculation and monetary policy behaviour in the 1992 currency crisis: the Italian case Abstract: The paper proposes an explanation for the 1992 currency crisis as the result of monetary policy behaviour and private agents' speculation. Our analysis reveals how speculators' expectations and the behaviour of the monetary policy authority were formed on the widespread beliefs about the future value of income. We show that the real effects of monetary policy measures represent the link between the action of the central bank and speculation. Journal: International Economic Journal Pages: 285-297 Issue: 3 Volume: 22 Year: 2008 Keywords: exchange rate, financial crisis, expected income, Kalman filter, X-DOI: 10.1080/10168730802288125 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802288125 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:3:p:285-297 Template-Type: ReDIF-Article 1.0 Author-Name: Liutang Gong Author-X-Name-First: Liutang Author-X-Name-Last: Gong Title: Social status, inflation uncertainty and growth in a cash-in-advance economy Abstract: In a stochastic monetary model with the cash-in-advance constraint and the social-status concern, this paper studies the effects of inflation and inflation variability on growth. It is shown that the Tobin effect still holds under deterministic monetary growth. The effect of inflation on growth, however, is ambiguous under stochastic monetary growth: the effect is positive when an agent's desire for social status is relatively strong and negative when this desire is relatively weak. It is also found that inflation variability always stimulates growth. Journal: International Economic Journal Pages: 299-314 Issue: 3 Volume: 22 Year: 2008 Keywords: inflation uncertainty, social status, economic growth, cash-in-advance constraint, X-DOI: 10.1080/10168730802294545 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802294545 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:3:p:299-314 Template-Type: ReDIF-Article 1.0 Author-Name: Huseyin Tastan Author-X-Name-First: Huseyin Author-X-Name-Last: Tastan Author-Name: Nuri Yildirim Author-X-Name-First: Nuri Author-X-Name-Last: Yildirim Title: Business cycle asymmetries in Turkey: an application of Markov-switching autoregressions Abstract: This paper examines business cycle characteristics of the Turkish economy in the liberalization (post-1980) period using a Markov-switching Autoregressive (MSAR) model framework. The importance of the model selection process is emphasized in an extensive search for the appropriate MS model. The business cycle properties are found to be very sensitive to the state dimension, the choice of the MS model (classified according to regime-dependent parameters) and the autoregressive lag order. The chosen two-regime MS model suggests four recessionary and five expansionary phases in the post-1980 period. Business cycle phases are found to be asymmetric with the probability of switching from a recession to expansion exceeding the probability of switching from expansion to recession. The paper also provides evidence on the usefulness of a non-linear model as compared with a linear alternative in the context of business cycle research in an emerging economy using various parametric and non-parametric tests. Non-linear and linear models are compared and evaluated using kernel density and conditional expectation estimates by simulating data from respective models. Journal: International Economic Journal Pages: 315-333 Issue: 3 Volume: 22 Year: 2008 Keywords: Markov switching AR model, business cycle, asymmetry tests, emerging economy, Turkey, X-DOI: 10.1080/10168730802376151 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802376151 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:3:p:315-333 Template-Type: ReDIF-Article 1.0 Author-Name: George Tawadros Author-X-Name-First: George Author-X-Name-Last: Tawadros Title: The endogeneity of the optimum currency area criteria: an application to ASEAN Abstract: In this paper, the endogeneity hypothesis of the optimum currency area criteria is tested for seven economies who are members of the Association of South East Asian Nations (ASEAN). The empirical evidence presented shows that greater trade flows between these countries will lead to increased specialisation according to their comparative advantage, resulting in more divergent business cycles across ASEAN. As such, the endogeneity hypothesis of the optimum currency area criteria is rejected. This finding suggests that the ASEAN economies have not yet achieved a sufficient degree of harmonisation and convergence in their business cycles through trade, implying that these countries are not yet synchronised enough to enjoy the benefits of monetary unification. Journal: International Economic Journal Pages: 335-343 Issue: 3 Volume: 22 Year: 2008 Keywords: optimum currency area criteria, endogeneity, ASEAN, instrumental variables, X-DOI: 10.1080/10168730802288141 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802288141 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:3:p:335-343 Template-Type: ReDIF-Article 1.0 Author-Name: Thanasis Stengos Author-X-Name-First: Thanasis Author-X-Name-Last: Stengos Author-Name: Aurangzeb Aurangzeb Author-X-Name-First: Aurangzeb Author-X-Name-Last: Aurangzeb Title: An empirical investigation of the relationship between education and growth in Pakistan Abstract: In this paper we try to examine the impact of education on growth in Pakistan for the time period of 1973-2001. Education, measured as gross enrollments and total expenditures, is broken down into primary, secondary and tertiary as well as by gender in each of the above categories. Time series techniques are used to determine whether education, for each category, has a causal impact on growth. The robustness of these results is then examined using the Levine-Renelt (1992) methodology. We find that secondary and higher education has a strong and robust impact on growth, whereas, at the primary level only initial female enrolments show a causal but not robust impact on growth. Journal: International Economic Journal Pages: 345-359 Issue: 3 Volume: 22 Year: 2008 Keywords: human capital, economic development, X-DOI: 10.1080/10168730802294677 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802294677 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:3:p:345-359 Template-Type: ReDIF-Article 1.0 Author-Name: Irina Bunda Author-X-Name-First: Irina Author-X-Name-Last: Bunda Author-Name: Jean-Baptiste Desquilbet Author-X-Name-First: Jean-Baptiste Author-X-Name-Last: Desquilbet Title: The bank liquidity smile across exchange rate regimes Abstract: Combining panel data on bank liquidity at the individual level and data on their macroeconomic environment, for a sample of commercial banks in emerging countries between 1995 and 2004, we show that there exists a 'bank liquidity smile across exchange rate regimes'. In extreme regimes at both ends of the line, i.e. for pure floating exchange rate regimes at one end and currency boards and dollarised economies at the other end, bank assets are more liquid than in intermediate regimes. Journal: International Economic Journal Pages: 361-386 Issue: 3 Volume: 22 Year: 2008 Keywords: bank liquidity, exchange rate regimes, currency boards, emerging countries, X-DOI: 10.1080/10168730802287952 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802287952 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:3:p:361-386 Template-Type: ReDIF-Article 1.0 Author-Name: Winston Moore Author-X-Name-First: Winston Author-X-Name-Last: Moore Author-Name: Marlon Williams Author-X-Name-First: Marlon Author-X-Name-Last: Williams Title: Evidence on the sectoral monetary transmission process under a fixed exchange rate regime Abstract: Traditional macroeconomic models suggest that monetary policy changes are largely ineffective in fixed exchange rate economies. However, Edwards and Vegh (1997) present a model that shows this might not be the case, as a tightening in monetary policy raises financial costs faced by firms and therefore lowers real wages and, by extension, consumption. This paper empirically tests this hypothesis using data on a country with one of the longest running fixed exchange rate regimes (1975-present). The results of the study confirm the theoretical predictions of Edwards and Vegh, but they also show that the propagation of nominal shocks in fixed exchange rate systems is comparatively slower than in countries with a more flexible exchange rate regime. Journal: International Economic Journal Pages: 387-398 Issue: 3 Volume: 22 Year: 2008 Keywords: monetary transmission, fixed exchange rates, cointegration, X-DOI: 10.1080/10168730802288067 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802288067 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:3:p:387-398 Template-Type: ReDIF-Article 1.0 Author-Name: Ghazi Boulila Author-X-Name-First: Ghazi Author-X-Name-Last: Boulila Author-Name: Lobna Bousrih Author-X-Name-First: Lobna Author-X-Name-Last: Bousrih Author-Name: Mohamed Trabelsi Author-X-Name-First: Mohamed Author-X-Name-Last: Trabelsi Title: Social capital and economic growth: empirical investigations on the transmission channels Abstract: This paper explores the possible transmission channels of social capital to economic growth for a sample of some developed and developing countries during the period 1980-2000, using a simultaneous equation model. The main results of this paper are, first, the level of trust as a measure of social capital and growth are significantly and positively correlated; second, a high level of trust also has an indirect effect on economic activity through its effect on institutional development; third, such results are found to be robust statistically with the extreme bound analysis (EBA). It corroborates the fact that an improvement of the social infrastructure with high levels of trust and cooperation between individuals not only has a direct but also an indirect effect on economic growth through the development of institutions in the economy. Journal: International Economic Journal Pages: 399-417 Issue: 3 Volume: 22 Year: 2008 Keywords: social capital, institution and economic growth, X-DOI: 10.1080/10168730802287994 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802287994 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:3:p:399-417 Template-Type: ReDIF-Article 1.0 Author-Name: Yu Chen Author-X-Name-First: Yu Author-X-Name-Last: Chen Title: Opening-up or institutional development? Evidence from China Abstract: 'Trade fundamentalists' and 'institutionalists' disagree about whether openness or institutions are more important for economic growth. This paper would like to propose a new perspective: openness and institutional development interact with each other. The materialization of the effects of openness on economic growth depends on the existence of adequate institutions, and in the other way around openness may speed up institutional development in the direction of becoming more growth-enhancing. We analyze China's opening-up and institutional development in the past two decades to illustrate the interaction. We then empirically test for the interactions between openness and institutional development, using a panel of Chinese provinces over the past two decades. The results are positive. Journal: International Economic Journal Pages: 419-430 Issue: 4 Volume: 22 Year: 2008 Keywords: openness, institutions, economic growth, China (Asia), X-DOI: 10.1080/10168730802497387 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802497387 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:4:p:419-430 Template-Type: ReDIF-Article 1.0 Author-Name: Eskander Alvi Author-X-Name-First: Eskander Author-X-Name-Last: Alvi Author-Name: Seife Dendir Author-X-Name-First: Seife Author-X-Name-Last: Dendir Title: On attenuation of moral hazard in risk sharing in poor urban economies Abstract: This paper examines how risk sharing is shaped by moral hazard and enforcement concerns. The existing literature mostly looks at each concern in isolation and misses out on an interesting tradeoff between insurance and production (effort) that is introduced by jointly incorporating moral hazard and enforcement problems. We show that self-enforcement of contracts requires reduced insurance which in turn softens the moral hazard stance, thereby enhancing effort. Households therefore work harder and produce more output, though they are less insured. This offers an explanation of why informal risk sharing persists despite potentially significant monitoring and enforcement difficulties. Journal: International Economic Journal Pages: 431-444 Issue: 4 Volume: 22 Year: 2008 Keywords: risk sharing, moral hazard, commitment problems, poor urban economies, X-DOI: 10.1080/10168730802497429 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802497429 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:4:p:431-444 Template-Type: ReDIF-Article 1.0 Author-Name: Stilianos Fountas Author-X-Name-First: Stilianos Author-X-Name-Last: Fountas Author-Name: Menelaos Karanasos Author-X-Name-First: Menelaos Author-X-Name-Last: Karanasos Title: Are economic growth and the variability of the business cycle related? Evidence from five European countries Abstract: We use a long series of annual data that span over 100 years to examine the relationship between output growth and its uncertainty in five European countries. Using the GARCH methodology to proxy uncertainty, we obtain two important results. First, more uncertainty about output leads to a higher rate of growth in three of the five countries. Second, output growth reduces its uncertainty in all countries except one. Our results are robust to alternative specifications and provide strong support to the recent emphasis by macroeconomists on the joint examination of economic growth and the variability of the business cycle. Journal: International Economic Journal Pages: 445-459 Issue: 4 Volume: 22 Year: 2008 Keywords: output growth, output growth uncertainty, GARCH, X-DOI: 10.1080/10168730802497478 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802497478 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:4:p:445-459 Template-Type: ReDIF-Article 1.0 Author-Name: Marcus Dittrich Author-X-Name-First: Marcus Author-X-Name-Last: Dittrich Title: Union wage setting in a dual labour market: the role of centralisation Abstract: This paper analyses the centralisation of union wage bargaining when the workers' outside option is determined endogenously. A dual labour market model is developed where the wage rate in the first sector is either the result of decentralised bargaining at the firm level or of centralised bargaining at the sector level. Workers' outside option is employment in a competitive sector. Labour market outcome depends on whether the union takes into account the connection between wages in both sectors. Wage setting centralisation increases social welfare if union's bargaining power at the firm level is relatively high and/or the union at the sector level represents a relatively large number of workers. Journal: International Economic Journal Pages: 461-470 Issue: 4 Volume: 22 Year: 2008 Keywords: union wage bargaining, dual labour market, endogenous outside option, degree of centralisation, X-DOI: 10.1080/10168730802497536 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802497536 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:4:p:461-470 Template-Type: ReDIF-Article 1.0 Author-Name: Abhijit Sen Gupta Author-X-Name-First: Abhijit Sen Author-X-Name-Last: Gupta Title: Does capital account openness lower inflation? Abstract: This paper investigates the relationship between capital account openness and inflation since the 1980s. It argues that widespread capital account liberalization during the last two decades appears to have contributed to the worldwide disinflation observed during the same period. The paper builds a theoretical model to motivate the presence of a negative link between financial integration and inflation. It tests the prediction of the theoretical model by employing static and dynamic panel data procedures. Financial integration appears to discipline monetary authorities, or to help them convince the private sector that they will be more disciplined in the future. Journal: International Economic Journal Pages: 471-487 Issue: 4 Volume: 22 Year: 2008 Keywords: capital account openness, inflation, discipline effect, X-DOI: 10.1080/10168730802497551 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802497551 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:4:p:471-487 Template-Type: ReDIF-Article 1.0 Author-Name: Alfons Palangkaraya Author-X-Name-First: Alfons Author-X-Name-Last: Palangkaraya Author-Name: Andreas Waldkirch Author-X-Name-First: Andreas Author-X-Name-Last: Waldkirch Title: Relative factor abundance and FDI factor intensity in developed countries Abstract: This study looks at the link between the patterns of trade-revealed comparative advantage and net inward foreign direct investment in five developed countries: the United Kingdom, the United States, Japan, France, and Italy. It thus extends earlier work by Maskus and Webster (1995) who analyzed two countries, the United Kingdom and South Korea. Despite assertions in the literature that market access is the primary motive for foreign direct investment flows among developed countries, this study shows that there is a significant role for comparative advantage in determining inflows of foreign direct investment in developed countries, especially in the services industry. Journal: International Economic Journal Pages: 489-508 Issue: 4 Volume: 22 Year: 2008 Keywords: foreign direct investment, comparative advantage, Heckscher-Ohlin-Vanek, X-DOI: 10.1080/10168730802497577 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802497577 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:4:p:489-508 Template-Type: ReDIF-Article 1.0 Author-Name: Michael Gast Author-X-Name-First: Michael Author-X-Name-Last: Gast Author-Name: Roland Herrmann Author-X-Name-First: Roland Author-X-Name-Last: Herrmann Title: Determinants of foreign direct investment of OECD countries 1991-2001 Abstract: It is the objective of this paper to identify the determinants that led to the increase in worldwide foreign direct investment during the 1990s. The paper also addresses the question of whether these factors influenced exports differently. Therefore, using data from 22 countries reporting to the OECD, gravity models for bilateral FDI stocks/flows and exports are estimated, first in a cross-section setting for 1999 and then as a panel data set for the period 1991-2001. In order to control for EU-specific effects, a distinction is made between intra-EU25 observations and observations outside the EU25 area. Regressions are repeated with exports as a dependent variable in order to elaborate how far determinants of trade flows are identical or how far they differ. In the panel context, the results show that a change in total market size is an important aspect that leads both FDI and exports in the same direction. Only exports are significantly influenced by relative market size. Stock market booms boost FDI but not exports. Political indicators and exchange rate changes suggest that exports are demand-driven while FDI is supply-driven. Overall, FDI and exports tended to flow relatively less abundantly to distant countries than to nearby countries over the period under consideration. This supports the idea of a complementary relationship between investment and trade. However, this trend is reversed for exports within the EU25 area. Journal: International Economic Journal Pages: 509-524 Issue: 4 Volume: 22 Year: 2008 Keywords: foreign direct investment and international trade, multinational firms, models with panel data, X-DOI: 10.1080/10168730802497601 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802497601 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:4:p:509-524 Template-Type: ReDIF-Article 1.0 Author-Name: Mark Weder Author-X-Name-First: Mark Author-X-Name-Last: Weder Title: Money growth rules as stabilization policies in open economies Abstract: High degrees of relative risk aversion induces indeterminacy in cash-in-advance economies. In a small open economy context, this paper finds that endogenous money growth rules can pre-empt such sunspot equilibria in an open economy context. The most promising candidates are policies that actively target past inflation movements or aggregate demand as well as the expected price level. Journal: International Economic Journal Pages: 525-537 Issue: 4 Volume: 22 Year: 2008 Keywords: cash-in-advance economies, Taylor rules, sunspot equilibria, X-DOI: 10.1080/10168730802497635 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802497635 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:22:y:2008:i:4:p:525-537 Template-Type: ReDIF-Article 1.0 Author-Name: Daron Djerdjian Author-X-Name-First: Daron Author-X-Name-Last: Djerdjian Title: Economies of Scale, Ideology and Trade Policy Abstract: This paper analyses trade policy within a modified version of the well-known political economy models of Hillman (1989) and Long & Vousden (1991). The modified model incorporates economies of scale in production and cast doubts on viewing trade policy as solely determined by political ideology and re-election motives. Cross-country analyses confirm our predictions and establish that strategic economic as well as political concerns are dominant in trade policy. Journal: International Economic Journal Pages: 1-21 Issue: 1 Volume: 23 Year: 2009 Keywords: Economies of scale, ideology, trade policy, protection, welfare, X-DOI: 10.1080/10168730802696475 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802696475 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:1:p:1-21 Template-Type: ReDIF-Article 1.0 Author-Name: Jie Li Author-X-Name-First: Jie Author-X-Name-Last: Li Author-Name: Ramkishen Rajan Author-X-Name-First: Ramkishen Author-X-Name-Last: Rajan Title: Foreign Direct Investment and Technology Transfer Under Uncertainty in a Liberalizing Host Economy Abstract: This paper tackles the issue of investment and optimal 'choice' of market structure for a foreign multinational enterprise (MNE) in a newly liberalized economy under uncertainty and in the presence of sunk costs. A minimalist duopolistic model is developed whereby a foreign investor's subjective belief about the probability distribution of policy uncertainty is endogenized as a function of the aggregate output in the tradable goods sector. The main propositions derived from the model are consistent with some unconventional empirical findings in the literature on Foreign Direct Investment (FDI), technology transfer to and crowding out of domestic firms in LDEs. Journal: International Economic Journal Pages: 23-41 Issue: 1 Volume: 23 Year: 2009 Keywords: Cournot, FDI, MNE, Stackelberg, technology transfer, uncertainty, X-DOI: 10.1080/10168730802696483 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802696483 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:1:p:23-41 Template-Type: ReDIF-Article 1.0 Author-Name: Barbara Dluhosch Author-X-Name-First: Barbara Author-X-Name-Last: Dluhosch Title: Trade and the Redistributive State Abstract: According to popular belief, welfare-state arrangements will become unsustainable in face of low-cost competition from abroad. Yet, in contrast to much of the theoretical work that predicts a race-to-the-bottom, empirical studies do not seem to support the notion that globalization is necessarily the demise of the welfare state. Whereas most of the literature approaches the issue of globalization and the redistributive state from a normative angle, this paper provides a political-economy-explanation. It shows that, with majoritarian redistribution and endogenous labor supply, redistributive tax rates actually tend to be higher in the integrated as opposed to the isolated economy. Depending on factor differentials within the population as well as technology parameters, redistributive budget-to-GNP ratios may nevertheless be lower, even if the redistributive tax rate increases. Journal: International Economic Journal Pages: 43-64 Issue: 1 Volume: 23 Year: 2009 Keywords: Globalization, trade, welfare state, majoritarian redistribution, political economy, X-DOI: 10.1080/10168730802696608 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802696608 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:1:p:43-64 Template-Type: ReDIF-Article 1.0 Author-Name: William Miles Author-X-Name-First: William Author-X-Name-Last: Miles Title: Central Bank Independence, Inflation and Uncertainty: The Case of Colombia Abstract: Colombia undertook reform of its central bank in 1991, pushing it in the direction of greater independence. We find that this reform led to a significant decrease in the level of inflation, as well as inflation uncertainty, suggesting an increase in credibility. However, there has also been an increase in inflation persistence since reform. The lower mean but greater persistence of inflation indicates that central bank independence has shifted the Phillips curve inward but also flattened it, a result consistent with recent research for the Euro-zone and the United States. Finally, further analysis reveals that, in accordance with the Friedman-Ball hypothesis, higher inflation raises uncertainty in Colombia, but that uncertainty does not increase inflation. Journal: International Economic Journal Pages: 65-79 Issue: 1 Volume: 23 Year: 2009 Keywords: Central bank independence, Colombia, X-DOI: 10.1080/10168730802696624 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802696624 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:1:p:65-79 Template-Type: ReDIF-Article 1.0 Author-Name: Wei-Bin Zhang Author-X-Name-First: Wei-Bin Author-X-Name-Last: Zhang Title: Agglomeration and Returns to Scale with Capital and Public Goods in a Multi-Regional Economy Abstract: This paper develops a multi-regional growth model with amenity, capital accumulation and regional public goods. The economy consists of any number of regions and each region consists of the industrial sector and public sector. The industrial sector provides goods in perfectly competitive markets. The public sector, which is financed by the regional government's tax incomes, supplies regional public goods. The public goods affect both firms and households. We show the existence of a unique equilibrium in the dynamic system. The comparative statics analysis also provides some important insights. For instance, if environmental improvement occurs in the advanced (less advanced) region, the national output rises (falls). If a region has a high rate of technological change and the other region remains technologically stationary, economic activities and labor force tend to be located in the technologically advancing region. If the propensity to save is increased, national output is increased and more people will be located in the technologically advanced region. Journal: International Economic Journal Pages: 81-109 Issue: 1 Volume: 23 Year: 2009 Keywords: Multi-region growth, economic geography, capital accumulation, endogenous amenity, public goods, X-DOI: 10.1080/10168730802696673 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802696673 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:1:p:81-109 Template-Type: ReDIF-Article 1.0 Author-Name: Isabel Ruiz Author-X-Name-First: Isabel Author-X-Name-Last: Ruiz Author-Name: Elias Shukralla Author-X-Name-First: Elias Author-X-Name-Last: Shukralla Author-Name: Carlos Vargas-Silva Author-X-Name-First: Carlos Author-X-Name-Last: Vargas-Silva Title: Remittances, Institutions and Growth: A Semiparametric Study Abstract: In this article we re-examine the relationship between remittances and economic growth placing special attention on the nonlinearity of this relationship. Previous studies have ignored the non-linearity of the relationship between remittances and economic growth or have used a quadratic term to capture nonlinearity. We show that the relationship between remittances and growth is neither linear nor quadratic and propose the use of a semiparametric model to avoid the risk of misspecification bias from imposing an arbitrary functional form. We find evidence of a positive relationship between remittances and growth in parametric estimations; however, such a relationship disappears when nonlinearity is taken into account using non-parametric techniques. Journal: International Economic Journal Pages: 111-119 Issue: 1 Volume: 23 Year: 2009 Keywords: Migration, remittances, economic growth, X-DOI: 10.1080/10168730802696715 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802696715 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:1:p:111-119 Template-Type: ReDIF-Article 1.0 Author-Name: Gouranga Das Author-X-Name-First: Gouranga Author-X-Name-Last: Das Author-Name: Hiranya Nath Author-X-Name-First: Hiranya Author-X-Name-Last: Nath Author-Name: Halis Murat Yildiz Author-X-Name-First: Halis Murat Author-X-Name-Last: Yildiz Title: International Productivity Differences and the Roles of Domestic Investment, FDI and Trade Abstract: This paper calculates Theil's entropy index to measure the extent of productivity differences across 92 countries for the period from 1970 to 2003. While there is evidence of increasing differences in productivity across these countries, we observe different patterns when we group the countries by income levels. These differences seem to be decreasing among middle income developing and developed countries, whereas they seem to be widening among low and high income developing countries. The results of our multivariate time series analysis also suggest that FDI increases productivity differences among low and high income developing countries, whereas GDI reduces these differences among low income countries in the long-run. Granger causality test results indicate that while an increase in GDI leads to a decline in growth of trade, a higher growth of trade appears to be important for attracting FDI to middle income countries. Furthermore, a reduction in productivity differences and a higher FDI growth lead to higher growth of trade in developed countries. Journal: International Economic Journal Pages: 121-142 Issue: 1 Volume: 23 Year: 2009 Keywords: Productivity differences, Theil's index, entropy, domestic investment, foreign direct investment, trade openness, cointegration, Granger causality, X-DOI: 10.1080/10168730802700277 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802700277 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:1:p:121-142 Template-Type: ReDIF-Article 1.0 Author-Name: Samrat Goswami Author-X-Name-First: Samrat Author-X-Name-Last: Goswami Author-Name: Rangan Gupta Author-X-Name-First: Rangan Author-X-Name-Last: Gupta Title: An Endogenous Growth Model of a Financially Repressed Small Open Economy Abstract: The paper develops a monetary endogenous growth model of a financially repressed small open economy, characterized by curb markets, capital mobility, transaction costs in domestic and foreign capital markets, and a flexible exchange rate system, to analyze the impact of financial liberalization - interest rate deregulation and lower multiple reserve requirements - on growth and inflation. When the model is calibrated to match world figures, we find that interest rate deregulation enhances growth and reduces inflation in steady-state. For relatively smaller transaction costs in the curb market, the above result is, however, reversed. Under such circumstances, lowering the transaction costs in the foreign capital market tends to restore the growth-enhancing (inflation-reducing) capabilities of interest rate deregulation. Lower reserve requirements, though, always ensures lower (higher) steady-state inflation (growth). Journal: International Economic Journal Pages: 143-161 Issue: 1 Volume: 23 Year: 2009 Keywords: Financial repression, growth and inflation, unofficial financial markets, monetary policy, X-DOI: 10.1080/10168730802696772 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730802696772 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:1:p:143-161 Template-Type: ReDIF-Article 1.0 Author-Name: Bharati Basu Author-X-Name-First: Bharati Author-X-Name-Last: Basu Author-Name: Jianfeng Yao Author-X-Name-First: Jianfeng Author-X-Name-Last: Yao Title: Foreign Direct Investment and Skill Formation in China Abstract: Using panel data analyses, this paper examines the relation between human capital formation and Foreign Direct Investment (FDI) in China. It shows that FDI has a significant effect on human capital formation, at least for the period 1995-2001. When we estimate the relationship between FDI and skill formation for the coastal and non-coastal provinces separately, the positive relationship is maintained, and this relationship also holds when we consider investment in real estate or the ratio of number of foreign firms to total number of firms investing in China. The results stand robust in the causality test and the sensitivity analysis. Journal: International Economic Journal Pages: 163-179 Issue: 2 Volume: 23 Year: 2009 Keywords: China, FDI and skill formation, X-DOI: 10.1080/10168730902901106 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730902901106 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:2:p:163-179 Template-Type: ReDIF-Article 1.0 Author-Name: Don Clark Author-X-Name-First: Don Author-X-Name-Last: Clark Title: Intraindustry Specialization and the Proposed Korea-United States Free Trade Agreement Abstract: Changes in intraindustry specialization indicators over the 2000-2007 period are used to assess factor adjustment pressures that may arise in Korea from the proposed Korea-United States Free Trade Agreement (KORUS FTA). There is considerable scope for intraindustry specialization between Korea and the United States. Results show few industries in Korea are candidates for adjustment problems. The 14 industries that may face adjustment pressures account for 13% of all Korean imports from the United States. Long tariff phase-out periods, tariff-rate quotas and import safeguards will be used to ease factor adjustment pressures in import-sensitive industries. Journal: International Economic Journal Pages: 181-195 Issue: 2 Volume: 23 Year: 2009 Keywords: Economic integration, free trade agreement, intraindustry specialization, X-DOI: 10.1080/10168730902901163 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730902901163 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:2:p:181-195 Template-Type: ReDIF-Article 1.0 Author-Name: Nishaal Gooroochurn Author-X-Name-First: Nishaal Author-X-Name-Last: Gooroochurn Title: Optimal Commodity Taxation in the Presence of Tourists Abstract: This paper sets up a simple extension of the basic Ramsey model to include tourism and it provides a theoretical analysis of the efficiency, equity and disincentive of work effects of commodity taxation in the presence of tourists. Tourism is a special export commodity for which the effect of a commodity tax is a mixture of domestic and export tax effects. It is found that commodity taxation has a lower marginal excess burden with tourists than without, although this may not be the case when tourist arrival is endogenised. We also found that taxing tourism has a positive equity effect because domestic demand for tourism products is mostly from richer household groups. Finally, since tourism products are complementary to leisure, taxing tourism has also a positive disincentive of work effect. Journal: International Economic Journal Pages: 197-209 Issue: 2 Volume: 23 Year: 2009 Keywords: Optimal taxation, tourism, X-DOI: 10.1080/10168730902901239 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730902901239 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:2:p:197-209 Template-Type: ReDIF-Article 1.0 Author-Name: Gokhan Akay Author-X-Name-First: Gokhan Author-X-Name-Last: Akay Title: New Look on the Specific Factor Model: Empirical Evidence from Manufacturing Industries in Tanzania Abstract: This study analyzes the impact of trade on wages in the context of the specific factor model by focusing on the link between trade and the average real wage. A recent paper by Jones & Ruffin (2008) shows how one can use the specific factor model to predict how labor should fare from an improvement in the terms of trade, an increase in the price of exportables relative to importables. For this purpose, I use annual firm-level data on the manufacturing sector in Tanzania during the period 1992 to 1998. I find that a ceteris paribus increase in the price of exportables may benefit labor in the food-beverage industry but hurt labor in the textile-garment, wood-furniture and metal-machinery industries. There are industries where the specific factor model predicts that exporting would help workers, but where the Stolper-Samuelson theorem of the Hecksher-Ohlin model predicts the reverse. Journal: International Economic Journal Pages: 211-226 Issue: 2 Volume: 23 Year: 2009 Keywords: Specific factor model, wages, terms of trade, elasticity of substitution, X-DOI: 10.1080/10168730902903334 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730902903334 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:2:p:211-226 Template-Type: ReDIF-Article 1.0 Author-Name: Mostafa Malki Author-X-Name-First: Mostafa Author-X-Name-Last: Malki Author-Name: Henry Thompson Author-X-Name-First: Henry Author-X-Name-Last: Thompson Author-Name: Osei-Agyeman Yeboah Author-X-Name-First: Osei-Agyeman Author-X-Name-Last: Yeboah Title: A Specific Factor Model of FTAA and North Carolina Textile and Apparel Industries Abstract: Textile and apparel industries in the US face import competition that promises to increase under the Free Trade Area of the Americas. The present paper utilizes a specific factors model of production and trade to predict the potential impact of FTAA on the textile and apparel industries in North Carolina. Income is redistributed across six labor skill groups in North Carolina, and returns to capital in textiles and apparel fall as does output. In spite of falling prices for textiles and apparels, the model predicts higher wages based on rising prices of other products. Journal: International Economic Journal Pages: 227-236 Issue: 2 Volume: 23 Year: 2009 Keywords: FTAA, textiles, apparels, X-DOI: 10.1080/10168730902903375 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730902903375 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:2:p:227-236 Template-Type: ReDIF-Article 1.0 Author-Name: Eiji Yamamura Author-X-Name-First: Eiji Author-X-Name-Last: Yamamura Author-Name: Inyong Shin Author-X-Name-First: Inyong Author-X-Name-Last: Shin Title: Effects of Income Inequality on Growth through Efficiency Improvement and Capital Accumulation Abstract: In the present paper, the inverted-U shape relationship between economic growth and inequality found in Chen (2003) is re-examined. We decompose productivity growth into efficiency improvement, capital accumulation and technological progress and then ascertain their determinants by employing fixed effects and dynamic panel models. In particular, this paper focuses on the question of how economic inequality affects capital accumulation and efficiency improvement. Key findings are that inequality enhances efficiency improvement as well as capital accumulation and then undermines them as inequality widens. However, other factors such as human capital, openness and government consumption have different effects on them. Journal: International Economic Journal Pages: 237-258 Issue: 2 Volume: 23 Year: 2009 Keywords: Inequality, economic growth, fixed effects, X-DOI: 10.1080/10168730902903391 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730902903391 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:2:p:237-258 Template-Type: ReDIF-Article 1.0 Author-Name: Luis Gil-Alana Author-X-Name-First: Luis Author-X-Name-Last: Gil-Alana Author-Name: Carlos Pestana Barros Author-X-Name-First: Carlos Pestana Author-X-Name-Last: Barros Title: A Historical Perspective of Inflation in Latin America. A New Approach Based on Fractional Integration with a Structural Break Abstract: This paper deals with the analysis of inflation in Latin America across the 20th century. We use annual data from 18 countries using a methodology based on fractional integration. However, given the structure of the inflation rates in these countries, we allow for the possibility of a structural break that is endogenously determined by the model. The results show that for most of the countries the break-date takes place in the late 1980s or early 1990s, and the orders of integration are in all cases higher than 0.5 and, in many cases, smaller than 1, implying non-stationary mean reverting behaviour. Journal: International Economic Journal Pages: 259-279 Issue: 2 Volume: 23 Year: 2009 Keywords: Inflation, Latin America, fractional integration, structural break, X-DOI: 10.1080/10168730902903417 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730902903417 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:2:p:259-279 Template-Type: ReDIF-Article 1.0 Author-Name: Enzo Valentini Author-X-Name-First: Enzo Author-X-Name-Last: Valentini Title: Underground Economy, Evasion and Inequality Abstract: Economic theory is paying increasing attention to a non-observed economy (NOE) and its causes. Recently, a couple of works (Rosser et al., 2000, 2003) have claimed that there is a positive relationship between income inequality and the size of NOE. This supposed relationship is not so clear and deserves in-depth analysis. There is a crucial aspect that has been completely avoided in these studies: income inequality is mainly measured using 'regular' incomes and this fact could lead to some bias. The existence of a certain size of NOE implies some income evasion that can affect the inequality indexes used in the study of the relationship between NOE and inequality. Including the regional share of NOE in a wage equation, I find that, in the specific case of the Italian private sector employees, the income evasion attached to NOE tends to reduce inequality measured by regular wages statistics. Journal: International Economic Journal Pages: 281-290 Issue: 2 Volume: 23 Year: 2009 Keywords: Underground economy, inequality, tax evasion, X-DOI: 10.1080/10168730902903433 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730902903433 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:2:p:281-290 Template-Type: ReDIF-Article 1.0 Author-Name: Alberto Bucci Author-X-Name-First: Alberto Author-X-Name-Last: Bucci Title: Scale Effects, Savings and Factor Shares in a Human Capital-based Growth Model with Physical Capital Accumulation Abstract: Using a balanced-growth model with physical and human capital accumulation, we analyze quantitatively the long-run effects of changes in the savings rate and in income distribution (i.e. the shares of physical and human capital in income) on investment in skill acquisition, income growth, and the ratio of human to physical capital. In the long run, the ratio of physical to human capital is constant, so that these two factor inputs can grow at the same rate. This rate is a function of the economy's exogenous technological and preference parameters and depends positively on the share of skills invested in human capital formation. We also find that population growth is neither necessary nor conducive to economic growth, that the level of real income depends linearly on the level of human capital and that it is independent of population size. Journal: International Economic Journal Pages: 291-307 Issue: 3 Volume: 23 Year: 2009 Keywords: Economic growth, human and physical capital investments, scale effects, X-DOI: 10.1080/10168730903119385 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903119385 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:3:p:291-307 Template-Type: ReDIF-Article 1.0 Author-Name: Suk Jae Noh Author-X-Name-First: Suk Jae Author-X-Name-Last: Noh Title: Appropriation, Formal and Informal Sectors, and Efficient Endowment Distribution Abstract: By adding an informal sector whose output is not subject to appropriative interactions and assuming complementarity in the inputs for market production, this paper investigates how possible asymmetries in conflict affect the allocation of resources. It is shown that when the existing gap in relative appropriative skills is being closed, more resources are allocated to appropriative activities in the economy. We are, in this case, more likely to see a reduction in market activities but an increase in home activities. A poorer party is a natural producer rather than a natural fighter, which is the usual characterization of a less endowed party in the conflict analysis. By conducting a welfare analysis, this paper shows that a market-output-maximizing initial distribution of resources endowment is such that when one party has a comparative advantage in market production over appropriation, its initial fraction of total resource endowment should be greater than its relative productivity in market production. Journal: International Economic Journal Pages: 309-323 Issue: 3 Volume: 23 Year: 2009 Keywords: Appropriation, market production, home production, initial distribution of resource endowment, X-DOI: 10.1080/10168730903119393 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903119393 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:3:p:309-323 Template-Type: ReDIF-Article 1.0 Author-Name: Sunku Hahn Author-X-Name-First: Sunku Author-X-Name-Last: Hahn Title: Promotions Solely Based on Initial Evaluations Abstract: This paper analyzes a case where a competition for a promotion chance among the employees may cause an inefficiency inside a firm or an organization. It is shown that a firm or an organization can avoid the inefficiency by promoting employees not based on their job performances after entering a firm or an organization, but based on the initial evaluation scores that the employees get before they enter it. This means that there exist some cases where using only the monetary compensation turns out to be more efficient rather than using the promotion chance as an incentive for the employees. Journal: International Economic Journal Pages: 325-337 Issue: 3 Volume: 23 Year: 2009 Keywords: Promotion, initial evaluation, job performance, X-DOI: 10.1080/10168730903119419 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903119419 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:3:p:325-337 Template-Type: ReDIF-Article 1.0 Author-Name: Fadzlan Sufian Author-X-Name-First: Fadzlan Author-X-Name-Last: Sufian Title: Financial Disruptions and Bank Productivity Growth: Evidence from the Malaysian Experience Abstract: This paper examines, for the first time, the productivity of the Malaysian banking sector around the Asian financial crisis 1997. The non-parametric Malmquist Productivity Index (MPI) is used to compute individual banks' productivity levels. We find that the Malaysian banking sector has exhibited productivity regress due to the decline in efficiency. The results seem to suggest that the domestic banks have exhibited productivity progress attributed to technological change, while the foreign banks have exhibited productivity regress due to efficiency decline. We find that the large banks tend to experience productivity growth attributed to technological progress, while the small banks tend to experience productivity decline due to technological regress. The empirical results suggest that the small banks with its limited capabilities are at a disadvantage compared with their larger counterparts in terms of technological advancements, thus, rejecting the divisibility theory. Journal: International Economic Journal Pages: 339-369 Issue: 3 Volume: 23 Year: 2009 Keywords: Financial disruptions, bank productivity, Malmquist productivity index, Malaysia, X-DOI: 10.1080/10168730903119427 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903119427 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:3:p:339-369 Template-Type: ReDIF-Article 1.0 Author-Name: Marina Murat Author-X-Name-First: Marina Author-X-Name-Last: Murat Author-Name: Barbara Pistoresi Author-X-Name-First: Barbara Author-X-Name-Last: Pistoresi Title: Migrant Networks: Empirical Implications for the Italian Bilateral Trade Abstract: A significant number of empirical studies, focusing on different countries, have found a positive link between migration and trade. This paper studies the relationship between emigration, immigration and trade using Italian data. The sample regards 51 foreign trading partners and spans from 1990 to 2005. The results suggest that networks of Italian emigrants in foreign countries boost bilateral trade. The effects of immigrants are weak on exports and negative on imports. Results do not change when cultural and institutional dissimilarities between countries are considered. Journal: International Economic Journal Pages: 371-390 Issue: 3 Volume: 23 Year: 2009 Keywords: International migration, Italian bilateral trade, X-DOI: 10.1080/10168730903119435 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903119435 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:3:p:371-390 Template-Type: ReDIF-Article 1.0 Author-Name: Thanh Le Author-X-Name-First: Thanh Author-X-Name-Last: Le Title: Trade, Remittances, Institutions, and Economic Growth Abstract: This paper empirically investigates the role of trade, remittances, and institutions in economic development in a large sample of developing countries using recently developed instruments for all these variables. Both cross-country (over 30 years) and dynamic panel data (over 5-year periods) regressions of growth rates on instrumented trade, remittances, and institutions provide evidence of a significant impact of trade, institutions, and remittances on growth. While institutions foster growth, remittances hamper it. The effect of trade on growth is positive in cross-sectional regressions but ambiguous in dynamic panel data regressions. These results are indicative of a more important role for trade in explaining growth in the very long run compared with over shorter horizons. Journal: International Economic Journal Pages: 391-408 Issue: 3 Volume: 23 Year: 2009 Keywords: Economic growth, trade, remittances, institutions, X-DOI: 10.1080/10168730903119443 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903119443 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:3:p:391-408 Template-Type: ReDIF-Article 1.0 Author-Name: Siong Hook Law Author-X-Name-First: Siong Hook Author-X-Name-Last: Law Title: Trade Openness, Capital Flows and Financial Development in Developing Economies Abstract: This paper examines the impact of trade openness and capital flows on financial development in developing countries using a dynamic panel GMM estimation technique. The empirical results reveal that trade openness and capital flows are statistically significant determinants of financial development. Simultaneous opening of both the trade and capital accounts also appear to have positive impacts on financial development. The evidence also suggests that openness leads to improved financial development through institutional quality and competition channels. However, the institutional channel outperforms competition in ensuring the positive effects of openness on financial market depth in developing countries. Journal: International Economic Journal Pages: 409-426 Issue: 3 Volume: 23 Year: 2009 Keywords: Financial development, trade openness, capital flows, dynamic panel GMM analysis, X-DOI: 10.1080/10168730903268398 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903268398 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:3:p:409-426 Template-Type: ReDIF-Article 1.0 Author-Name: Joung Yeo Angela No Author-X-Name-First: Joung Yeo Angela Author-X-Name-Last: No Title: International Transmission of Technology and Trade: The Role of Cross-country Heterogeneity Abstract: In the framework where the channel of international transmission of technology is trade in intermediate inputs, this paper investigates the role of heterogeneities across countries. In particular, this paper analyzes how cross-country differences in production structure, national innovative capacity, and absorptive capacity affect the scope and magnitude of international R&D spillovers on productivity. The study is based on the industry-level data set that covers eight OECD countries from 1970 to 1995. It finds that accounting for cross-country differences in each of production structure (using country-specific input-output relations) and national innovative capacity (using patents granted per R&D investment) yields significantly different spillover effects than previous studies. This suggests that the effect of international R&D spillovers depends on both production structure and the pattern of international trade. Further, it finds the absorptive capacity of a country is positively related to spillovers. Journal: International Economic Journal Pages: 427-446 Issue: 3 Volume: 23 Year: 2009 Keywords: International trade, technology transmission, productivity, R&D, cross-country heterogeneity, X-DOI: 10.1080/10168730903119476 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903119476 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:3:p:427-446 Template-Type: ReDIF-Article 1.0 Author-Name: Yin-Wong Cheung Author-X-Name-First: Yin-Wong Author-X-Name-Last: Cheung Author-Name: Hiro Ito Author-X-Name-First: Hiro Author-X-Name-Last: Ito Title: A Cross-Country Empirical Analysis of International Reserves Abstract: Using data from more than 100 economies for the period of 1975 to 2005, we conduct an extensive empirical analysis of the determinants of international reserve holdings. Four groups of determinants, namely, traditional macro variables, financial variables, institutional variables, and dummy variables that control for individual economies' characteristics are considered. We find that the relationship between international reserves and their determinants is significantly different between developed and developing economies and is not stable over time. The estimation results indicate that, especially during the recent period, a developed economy tends to hold a lower level of international reserves than a developing one. Furthermore, there is only limited evidence that East Asian economies including China and Japan are accumulating an excessive amount of international reserves. Journal: International Economic Journal Pages: 447-481 Issue: 4 Volume: 23 Year: 2009 Keywords: Developed versus developing economies, excess hoarding, macro determinants, financial factors, institutional variables, X-DOI: 10.1080/10168730903372208 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903372208 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:4:p:447-481 Template-Type: ReDIF-Article 1.0 Author-Name: Enrico Saltari Author-X-Name-First: Enrico Author-X-Name-Last: Saltari Author-Name: Giuseppe Travaglini Author-X-Name-First: Giuseppe Author-X-Name-Last: Travaglini Title: The Productivity Slowdown Puzzle. Technological and Non-technological Shocks in the Labor Market Abstract: In this paper we address the question of whether labor supply shifts are the only source of the productivity slowdown that occurred across European countries in the last 15 years. This explanation implies that labor demand shifts are irrelevant. Using a simple dynamic model of the labor market, we show that the poor economic performance of the European countries can only be accounted for by a combination of two shocks: an adverse technological shock to the labor demand and a positive non-technological shock to the labor supply resulting from changes in institutions. We use a structural VAR model to estimate the contribution of these two shocks to the dynamics of employment and productivity. Our main conclusion is that technological shocks explain the decrease of the growth rate of productivity but not the increase in employment. The non-technological shocks, on the other hand, can capture the increase of employment but not the slowdown of labor productivity. Thus, both shocks are necessary to provide a complete picture of the employment-productivity trade off in Europe during the last 15 years. Journal: International Economic Journal Pages: 483-509 Issue: 4 Volume: 23 Year: 2009 Keywords: Productivity slowdown, labor market, SVAR, X-DOI: 10.1080/10168730903377819 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903377819 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:4:p:483-509 Template-Type: ReDIF-Article 1.0 Author-Name: Bradley Ewing Author-X-Name-First: Bradley Author-X-Name-Last: Ewing Author-Name: Benhua Yang Author-X-Name-First: Benhua Author-X-Name-Last: Yang Title: The Differential Growth Effect of FDI across US Regions Abstract: In this paper we examine and assess the differential impact of FDI on growth in eight US regions, as defined by the Bureau of Economic Analysis (BEA). The results show that the manufacturing FDI-growth relationship tends to vary across regions. In particular, while the New England, Mideast, Great Lakes, Rocky Mountains and Far West regions experienced a positive growth effect of manufacturing FDI over the sample period 1977-2001, other regions showed little evidence of such a relationship. Using disaggregated data across manufacturing sectors, we also find that there are great regional variations concerning the FDI-growth nexus, and only the Great Lakes and Far West regions experienced a beneficial impact of FDI on growth in all five manufacturing sectors examined. Journal: International Economic Journal Pages: 511-525 Issue: 4 Volume: 23 Year: 2009 Keywords: FDI, growth, manufacturing, X-DOI: 10.1080/10168730903372232 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903372232 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:4:p:511-525 Template-Type: ReDIF-Article 1.0 Author-Name: Hugo Reis Author-X-Name-First: Hugo Author-X-Name-Last: Reis Author-Name: Antonio Rua Author-X-Name-First: Antonio Author-X-Name-Last: Rua Title: An Input-Output Analysis: Linkages versus Leakages Abstract: Resorting to input-output analysis, the relationships between production sectors are investigated. For such assessment, the distinction between imported and domestically supplied inputs, which has been disregarded so far in empirical analysis, is crucial. Besides an accurate measurement of domestic linkages, it also allows us to evaluate the importance of international trade in the production process. Moreover, the interaction between domestic linkages and leakages resulting from international trade can also be analysed. The study of such links improves our knowledge on the economic production structure and how it has evolved over time, which is essential for policy making. Using as a case study a small open European economy, the Portuguese one, we assess sectoral interdependence and trade effects for individual sectors as well as for the economy as a whole. Journal: International Economic Journal Pages: 527-544 Issue: 4 Volume: 23 Year: 2009 Keywords: Input-output analysis, intersectoral linkages, coefficient of interdependence, coefficient of leakage, X-DOI: 10.1080/10168730903372323 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903372323 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:4:p:527-544 Template-Type: ReDIF-Article 1.0 Author-Name: Sohrab Abizadeh Author-X-Name-First: Sohrab Author-X-Name-Last: Abizadeh Author-Name: Manish Pandey Author-X-Name-First: Manish Author-X-Name-Last: Pandey Title: Trade Openness, Structural Change and Total Factor Productivity Abstract: The impact of trade openness on growth of total factor productivity (TFP) is investigated. Given the differences in tradability of goods across sectors as well as the ongoing structural change, we examine whether trade openness has had a differential impact on TFP growth of the three main sectors of an economy. While the positive impact of openness on TFP growth for the aggregate economy is confirmed, openness has had no appreciable impact on the growth of TFP in the agricultural and industrial sectors. We find that the positive effect of openness on TFP growth for the economy as a whole was mostly due to the positive relationship between the two variables for the services sector. Further, we conclude that the lack of a general consensus in past studies could be due to their neglect of structural change and temporal factors when analyzing the trade-TFP nexus. Journal: International Economic Journal Pages: 545-559 Issue: 4 Volume: 23 Year: 2009 Keywords: Trade, openness, sectors, total factor productivity, X-DOI: 10.1080/10168730903372273 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903372273 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:4:p:545-559 Template-Type: ReDIF-Article 1.0 Author-Name: Ajit Karnik Author-X-Name-First: Ajit Author-X-Name-Last: Karnik Author-Name: Mala Lalvani Author-X-Name-First: Mala Author-X-Name-Last: Lalvani Title: Heterogeneity in Growth Processes: Estimating Growth Regressions using Panel Data Abstract: This paper is concerned with estimating growth regressions for a panel of 104 countries with data spread over a 24-year period. The paper employs panel data estimation techniques. An important concern is whether growth regressions estimated for a large group can be replicated for smaller sub-groups of countries. The problem of parameter heterogeneity is investigated, and the results of the paper show that there is considerable parameter heterogeneity in the growth equations across groups. The major conclusion of the paper is that growth processes appear to be widely divergent across sub-groups of countries making the task of prescribing policy far more challenging and, hence, pointing to the need to incorporate country-specific institutional and political factors while recommending policies for growth. Journal: International Economic Journal Pages: 561-590 Issue: 4 Volume: 23 Year: 2009 Keywords: Growth regressions, parameter heterogeneity, panel data estimation techniques, X-DOI: 10.1080/10168730903372224 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903372224 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:4:p:561-590 Template-Type: ReDIF-Article 1.0 Author-Name: Yener Kandogan Author-X-Name-First: Yener Author-X-Name-Last: Kandogan Title: Trade Creation and Diversion Effects of Europe's Regional Liberalization Agreements Abstract: After a short review of recent developments in gravity modeling and an overview of the liberalization agreements in Europe, this paper measures the trade creation and diversion effects of major European agreements based on the results of a correctly specified triple-indexed gravity model with bilateral fixed effects. Discussion of the resulting trade creation and diversion focuses on the role of partner and non-partner country characteristics including size and relative factor endowments, as well as date, reciprocity, industry coverage, and rate of liberalization characteristics of the agreement. Journal: International Economic Journal Pages: 591-615 Issue: 4 Volume: 23 Year: 2009 Keywords: Gravity model, fixed effects, X-DOI: 10.1080/10168730903372257 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903372257 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:4:p:591-615 Template-Type: ReDIF-Article 1.0 Author-Name: Pierre Canac Author-X-Name-First: Pierre Author-X-Name-Last: Canac Author-Name: Hassan Shirvani Author-X-Name-First: Hassan Author-X-Name-Last: Shirvani Author-Name: Barry Wilbratte Author-X-Name-First: Barry Author-X-Name-Last: Wilbratte Title: The Stability of the Demand for Money in Monetary Unions: Some Empirical Evidence from WAEMU Abstract: Previous studies of the stability of the demand for money have been largely conducted in the context of individual countries. To the extent that these countries have control over their monetary policies, such an approach is well justified. However, for monetary unions, where the control over monetary policy is usually vested in a central or outside authority, it is more appropriate to examine the stability of the money demand for the union as a collective entity. This paper follows this approach with respect to a West African monetary union, the WAEMU, whose monetary policies are largely dictated by the French authorities. Using cointegration theory and CUSUM stability tests, we find evidence that the demand for broad money is stable in this union. Given the empirical results, the paper draws inferences regarding their implications for the formulation of optimal monetary policy for the WAEMU. Journal: International Economic Journal Pages: 617-628 Issue: 4 Volume: 23 Year: 2009 Keywords: Cointegration, stability tests, structural break, money demand, monetary union, X-DOI: 10.1080/10168730903372190 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903372190 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:23:y:2009:i:4:p:617-628 Template-Type: ReDIF-Article 1.0 Author-Name: Jong-Wha Lee Author-X-Name-First: Jong-Wha Author-X-Name-Last: Lee Author-Name: Kwanho Shin Author-X-Name-First: Kwanho Author-X-Name-Last: Shin Title: Exchange Rate Regimes and Economic Linkages Abstract: We investigate how the exchange rate regime influences economic linkages between countries. We divide the exchange rate regime into three classifications: currency union, peg and floating exchange rates. Unlike most studies that solely focus on the relationship between anchor and client countries, we infer the exchange rate regime between any two countries based on their relationship to the common anchor currency. Then we empirically explore how the various exchange rate regimes impact on bilateral trade, output co-movement and risk sharing. The extent of risk sharing is measured by consumption co-movement relative to output co-movement. We find that while currency union has the greatest effect, the peg regime also significantly boosts trade. We also find that while the peg regime contributes to both output and consumption co-movements, currency union strengthens only consumption co-movement and possibly lowers output co-movement. We interpret these findings to indicate that currency union, the strictest form of pegged regimes, leads to higher industry specialization and better risk sharing opportunities than the less strict peg regime. Journal: International Economic Journal Pages: 1-23 Issue: 1 Volume: 24 Year: 2010 Keywords: Exchange rate regime, trade, output co-movement, consumption co-movement, risk sharing, X-DOI: 10.1080/10168731003589741 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168731003589741 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:1:p:1-23 Template-Type: ReDIF-Article 1.0 Author-Name: Chun-Ping Chang Author-X-Name-First: Chun-Ping Author-X-Name-Last: Chang Author-Name: Chien-Chiang Lee Author-X-Name-First: Chien-Chiang Author-X-Name-Last: Lee Title: A Re-examination of German Government Approval and Economic Performance: Is There a Stable Relationship between Them? Abstract: This paper studies the stability between the government approval and macroeconomic series for Germany during 1977-2004 allowing structural breaks. We first execute traditional cointegration tests without breaks, and the results reveal weak evidence of a link between the political and economic variables. However, using Hansen's (1992) tests for parameter instability suggest that such a relationship between politics and economy may be unstable. After allowing for the structural breaks in the series and conducting Gregory and Hansen's (1996) cointegration test, we find that a clear cointegrated relationship undoubtedly exists between approval rates and macroeconomics; we discover that some events indeed affect the government's popularity. Overall, once we locate structural breakpoints, such as when the West German government was succeeded by Helmut Kohl in 1982, then we begin to distinguish the actual cointegrated relationships between the approval rate of government and macroeconomics before and after the structural breakpoint. Journal: International Economic Journal Pages: 25-43 Issue: 1 Volume: 24 Year: 2010 Keywords: Structural breaks, political business cycle, performance of government, macroeconomics, X-DOI: 10.1080/10168731003589691 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168731003589691 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:1:p:25-43 Template-Type: ReDIF-Article 1.0 Author-Name: Hiroyuki Nishiyama Author-X-Name-First: Hiroyuki Author-X-Name-Last: Nishiyama Author-Name: Masao Yamaguchi Author-X-Name-First: Masao Author-X-Name-Last: Yamaguchi Title: Foreign Direct Investment and the Unionization Rate Abstract: This paper examines the effect of foreign direct investment (FDI) on home wages by using a model assuming that two complementary intermediate goods are combined into a final product by an international/domestic division of labour. We find that FDI triggers higher (lower) home wages in the case that the ratio of non-unionized workers to unionized workers is sufficiently low (high). In addition, even if domestic and foreign production are complementary, the wages in the case of FDI can become lower than those in the case without FDI, in contrast to Skaksen and Sorensen (2001). Journal: International Economic Journal Pages: 45-52 Issue: 1 Volume: 24 Year: 2010 Keywords: Foreign direct investment, multinational firms, wage bargaining, firm's outside option, unionization rate, X-DOI: 10.1080/10168731003589725 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168731003589725 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:1:p:45-52 Template-Type: ReDIF-Article 1.0 Author-Name: Severine Menguy Author-X-Name-First: Severine Author-X-Name-Last: Menguy Title: Enlargement of the Economic and Monetary Union: To which Structurally Heterogeneous Countries? Abstract: We study the consequences of the entry of a structurally heterogeneous country on the well-being of the current members of a monetary union. Welfare would be increased if the new country is more open, if it has a smaller sensibility of its demand to the interest rate, and also generally if its supply function has a lower sensibility to inflation. Journal: International Economic Journal Pages: 53-70 Issue: 1 Volume: 24 Year: 2010 Keywords: Euro-area, enlargement, monetary policy, fiscal policy, structural heterogeneity, X-DOI: 10.1080/10168731003589824 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168731003589824 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:1:p:53-70 Template-Type: ReDIF-Article 1.0 Author-Name: U. Michael Bergman Author-X-Name-First: U. Michael Author-X-Name-Last: Bergman Author-Name: Michael Hutchison Author-X-Name-First: Michael Author-X-Name-Last: Hutchison Title: Expansionary Fiscal Contractions: Re-evaluating the Danish Case Abstract: The Expansionary Fiscal Contraction (EFC) hypothesis predicts that a major fiscal consolidation leads to an economic expansion under certain circumstances. We test this hypothesis, and the implied non-linear responses of the economy to large and small changes in fiscal policy, using data from the 1983 Danish fiscal reform. We use a structural VAR/event study methodology following Blanchard and Perotti (2002) that explicitly allows us to distinguish between normally marginal changes in fiscal policy and comprehensive fiscal reforms. We find that 'marginal changes' in fiscal policy (expenditure and tax changes) have the expected Keynesian effects on output and consumption. However, we find no evidence that the large fiscal consolidation in Denmark slowed the economy after controlling for a host of exogenous shocks and business cycle effects. Rather, we find some support for the hypothesis that the exogenous fiscal contraction in Denmark was a credible regime shift and, together with other reforms undertaken at the time, increased both private consumption and aggregate output. Journal: International Economic Journal Pages: 71-93 Issue: 1 Volume: 24 Year: 2010 Keywords: Expansionary fiscal contraction, structural VAR/event study, non-linearities, X-DOI: 10.1080/10168731003589857 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168731003589857 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:1:p:71-93 Template-Type: ReDIF-Article 1.0 Author-Name: Jose Mendez Naya Author-X-Name-First: Jose Mendez Author-X-Name-Last: Naya Title: Mixed Oligopoly and Foreign Direct Investment Abstract: By using a mixed duopoly model, this paper analyses the effects of domestic firm ownership status on foreign direct investment decisions. It is shown that, although public ownership can be understood as a protectionist device, foreign direct investment can only be an equilibrium strategy if the level of privatization of the domestic economy is high enough. Furthermore it is proved that foreign direct investment is harmful from a home welfare point of view. Journal: International Economic Journal Pages: 95-101 Issue: 1 Volume: 24 Year: 2010 Keywords: Mixed duopoly, tariffs, foreign direct investment, X-DOI: 10.1080/10168731003589774 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168731003589774 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:1:p:95-101 Template-Type: ReDIF-Article 1.0 Author-Name: Danilo Pelletiere Author-X-Name-First: Danilo Author-X-Name-Last: Pelletiere Author-Name: Kenneth Reinert Author-X-Name-First: Kenneth Author-X-Name-Last: Reinert Title: World Exports of New and Used Automobiles: A Gravity Model Comparison among the European Union, Japan and the United States Abstract: This paper considers new and used automobile exports of the European Union, Japan and the United States within a gravity model framework. This standard framework has similar explanatory power for the new and used automobile exports of the European Union and the United States, as well as for the new automobile exports of Japan, but not for Japan's used automobile exports, a finding the paper associates with the importance of left-hand driving in determining the markets for Japan's used (but not 'made to order' new) automobile exports. The paper concludes that, while used automobiles are somewhat more important to lower income markets, controlling for discrimination and other factors, used automobile trade clearly supplements new automobile trade from the prospective of the importing country. Journal: International Economic Journal Pages: 103-110 Issue: 1 Volume: 24 Year: 2010 Keywords: Gravity model, international automobile trade, new trade theory, X-DOI: 10.1080/10168731003589709 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168731003589709 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:1:p:103-110 Template-Type: ReDIF-Article 1.0 Author-Name: Mina Baliamoune-Lutz Author-X-Name-First: Mina Author-X-Name-Last: Baliamoune-Lutz Author-Name: Stefan Lutz Author-X-Name-First: Stefan Author-X-Name-Last: Lutz Title: Pre-emption, Predation, and Minimum Quality Standards Abstract: We present a model of vertical product differentiation and exit where a domestic and a foreign firm face fixed setup costs and quality-dependent costs of production and compete in quality and price in the domestic market. Quality-dependent costs are quadratic in qualities, but independent of the quantities produced. The domestic government may impose a minimum quality standard binding for both foreign and domestic firms. In the presence of an initial cost advantage of the domestic firm, a sufficiently high minimum quality standard set by the domestic government will enable the domestic firm to induce exit of the foreign firm, i.e. to engage in predation. However, the same standard would lead to predation by the foreign firm, if the foreign firm had the initial cost advantage! Journal: International Economic Journal Pages: 111-123 Issue: 1 Volume: 24 Year: 2010 Keywords: Vertical product differentiation, oligopoly, trade, quality, country asymmetries, X-DOI: 10.1080/10168731003589790 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168731003589790 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:1:p:111-123 Template-Type: ReDIF-Article 1.0 Author-Name: Kakali Mukhopadhyay Author-X-Name-First: Kakali Author-X-Name-Last: Mukhopadhyay Author-Name: Paul Thomassin Author-X-Name-First: Paul Author-X-Name-Last: Thomassin Title: Impact of Regional Economic Integration in East Asia Abstract: The current study evaluates the economy wide impact of trade liberalization in the ASEAN region along with China, Japan and Korea (ASEAN + 3) by the year 2020 using the GTAP framework. The study also assesses the environmental impact of the trade liberalization in the region focusing on the seven environmental indicators (CO2, CH4, N2O, BOD, COD, Suspended Solid and Industrial Waste). The result shows that the countries under agreement (ASEAN + 3) will benefit with increased output, expansion of trade and welfare due to trade reforms. Further, the integration will increase the global welfare, although the regions not under agreement in the world will show a decline in output growth. Vietnam will be gaining with the highest output growth among the ASEAN region; however, the impact on the environment would not be favourable. The environmental impact reveals a mixed outcome for participating countries under the agreement. The paper provides useful insight in pursuing greater trade liberalization among the countries under the study. Journal: International Economic Journal Pages: 125-153 Issue: 2 Volume: 24 Year: 2010 Keywords: Free trade agreement, East and South East Asia, GTAP, scenario, environment, X-DOI: 10.1080/10168731003657746 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168731003657746 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:2:p:125-153 Template-Type: ReDIF-Article 1.0 Author-Name: Koichi Yoshimine Author-X-Name-First: Koichi Author-X-Name-Last: Yoshimine Title: The Transmission of US Business Cycles to the Canadian Economy Abstract: As the substantial share of the Canadian trade occurs with the United States, one would expect that the fluctuations in US macroeconomic aggregates are rapidly transmitted to the Canadian economy. Specifically, the transmission should occur through changes in the flow of goods and financial assets. However, the standard general equilibrium models fail to show such a relationship. In this paper, I consider a small open-economy model taking the fluctuations of US variables as given and explicitly incorporating the flows of intermediate goods and financial assets. The simulation results show that the model can reproduce the actual data reasonably well when the trade share of intermediate goods is properly calibrated and the flow of financial asset is absent. That is, transmission does occur through trade in goods but not through assets. Journal: International Economic Journal Pages: 155-170 Issue: 2 Volume: 24 Year: 2010 Keywords: International business cycles, international transmissions, small open economy, X-DOI: 10.1080/10168737.2010.486886 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.486886 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:2:p:155-170 Template-Type: ReDIF-Article 1.0 Author-Name: Keunsuk Chung Author-X-Name-First: Keunsuk Author-X-Name-Last: Chung Title: Foreign Debt, Foreign Direct Investment and Volatility Abstract: We investigate how foreign debt and foreign direct investment (FDI) affect the growth and welfare of a stochastically growing small open economy. First, we find that foreign debt influences the growth of domestic wealth by lowering the cost of capital, while FDI affects the country's welfare by providing an additional source of permanent income. Second, a decline in domestic investment may improve domestic welfare as FDI replaces the gap. Even when the welfare deteriorates, its magnitude is mitigated, leaving more room for discretionary fiscal policy. Third, a fiscal policy aimed to stabilize domestic output fluctuations needs to be conducted not to crowd out the welfare benefit of FDI too much. Fourth, an economy with both types of foreign capital experiences wider welfare swings by external volatility shocks than the one with foreign debt alone, while the welfare effects from domestic volatility shocks are mitigated. The welfare effects of fiscal shocks are much smaller with both types of foreign capital. Lastly, the first-best labor income tax covers the government absorption by the labor's share of total output, and the capital income tax covers the rest. Investment is penalized or subsidized depending on the social marginal cost-gain differential. Journal: International Economic Journal Pages: 171-196 Issue: 2 Volume: 24 Year: 2010 Keywords: Foreign direct investment, foreign debt, inelastic debt supply, volatility, X-DOI: 10.1080/10168731003649628 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168731003649628 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:2:p:171-196 Template-Type: ReDIF-Article 1.0 Author-Name: Maurice Schiff Author-X-Name-First: Maurice Author-X-Name-Last: Schiff Author-Name: Yanling Wang Author-X-Name-First: Yanling Author-X-Name-Last: Wang Title: North-South Technology Spillovers: The Relative Impact of Openness and Foreign R&D Abstract: This paper examines the relative contribution of openness and the R&D content of trade to North-South trade-related knowledge diffusion and TFP growth. The measure of foreign R&D used in the literature on trade-related knowledge diffusion imposes identical contributions to TFP of openness and the R&D content of trade. We show that this restriction is not warranted and that openness has a greater impact on TFP than R&D. This finding is particularly strong in low R&D-intensity industries and - as might be expected - not as strong in R&D-intensive ones. The results indicate that the impact of openness on TFP in developing countries is larger than previously obtained in this literature, and that developing countries can obtain larger productivity gains from trade liberalization than previously thought. Journal: International Economic Journal Pages: 197-207 Issue: 2 Volume: 24 Year: 2010 Keywords: International trade, technology spillovers, X-DOI: 10.1080/10168737.2010.486889 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.486889 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:2:p:197-207 Template-Type: ReDIF-Article 1.0 Author-Name: Sherif Khalifa Author-X-Name-First: Sherif Author-X-Name-Last: Khalifa Title: Heterogeneity in Ability and Inheritance, Disparities, and Development Abstract: This paper investigates the impact of income inequality on economic growth. A two-period overlapping generations model is developed where agents are heterogeneous in innate abilities and inheritance. In the first period, they receive their inheritance and their abilities are revealed. There are only two types of abilities: high and low. Individuals decide on their education level, and divide their inheritance between spending on education and saving. In the second period, individuals supply their labor and allocate the labor income and the return to their saving between consumption and bequests to their offsprings. Initial capital stock is owned entirely by the capitalists. In this context, a more equal distribution of income enhances economic growth if the economy is lower than a threshold capital-labor ratio, while income inequality has an insignificant effect above this threshold. The predictions of the model are tested empirically using the Hansen (1999) threshold estimation. The results, using a panel of 70 countries for the period 1971-1999, suggest that there is a statistically significant threshold income per capita, below which the coefficient on the relationship between inequality and economic growth is significantly negative and above which the estimate is not significant. Journal: International Economic Journal Pages: 209-236 Issue: 2 Volume: 24 Year: 2010 Keywords: Income inequality, economic growth, X-DOI: 10.1080/10168737.2010.486893 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.486893 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:2:p:209-236 Template-Type: ReDIF-Article 1.0 Author-Name: Hooi Hooi Lean Author-X-Name-First: Hooi Author-X-Name-Last: Hooi Lean Author-Name: B. N. Ghosh Author-X-Name-First: B. N. Author-X-Name-Last: Ghosh Title: Economic Integration in Asia: Quo Vadis Malaysia? Abstract: Neo-liberal globalization has accelerated the space of economic integration in Asia, particularly between the rising superpowers of China and India and other Asian nations. In this connection, this paper examines the degree of economic integration between Malaysia and the rapidly developing economies of China and India on the one hand and the United States and Japan on the other. This study shows that Malaysia is more integrated with China and India than with the United States and Japan. It is not that global integration is becoming less significant in Malaysia but that regional integration is becoming more deterministic. Journal: International Economic Journal Pages: 237-248 Issue: 2 Volume: 24 Year: 2010 Keywords: China and India, Asian economy, TYDL causality, economic integration, X-DOI: 10.1080/10168737.2010.486891 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.486891 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:2:p:237-248 Template-Type: ReDIF-Article 1.0 Author-Name: Hrushikesh Mallick Author-X-Name-First: Hrushikesh Author-X-Name-Last: Mallick Title: Factors Determining the Exchange Rate Movement under a Partial Capital Mobility Regime Abstract: The study examines the rupee-US dollar exchange rate (Rs/$) behaviour in the presence of increasing and ample capital inflows in the post-reform period in India. Using monthly data (1994:4 to 2007:8) the study estimates a basic exchange rate model in a time series framework in order to assess the relative significance of capital inflows in the presence of interest rate, inflation rate and growth rate differentials and other factors (forward exchange rate/expected exchange rate) in influencing the rupee-dollar exchange rate behaviour. It finds the dominance of foreign institutional investments affecting the rupee-dollar exchange rate and, to a certain extent, it is seen that the influence of the growth rate differential affects the exchange rate behaviour in India. Journal: International Economic Journal Pages: 249-266 Issue: 2 Volume: 24 Year: 2010 Keywords: Exchange rate, capital mobility, interest rate, inflation, block Granger causality, X-DOI: 10.1080/10168737.2010.486887 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.486887 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:2:p:249-266 Template-Type: ReDIF-Article 1.0 Author-Name: Edward Ghartey Author-X-Name-First: Edward Author-X-Name-Last: Ghartey Title: Cointegration and Causal Relationship between Taxes and Spending for Kenya, Nigeria and South Africa Abstract: Causal relationships between taxes and spending are examined for three African countries using the GDP as a control variable, and dummy variables to address structural changes in Nigeria and South Africa. There is one cointegration equation between nominal fiscal variables in all three countries, one cointegration equation for Kenya and two cointegration equations for Nigeria and South Africa for the real fiscal variables and their respective dummy variables. Short-term results of the nominal variables show fiscal independence for all three countries. In real terms, taxes cause spending for Kenya and Nigeria and a weak fiscal synchronization for South Africa. There is long run fiscal synchronization in nominal terms for all three countries, and in real terms for both Nigeria and South Africa, while real taxes cause spending in Kenya. Long-run estimates show a unit increase in nominal (real) taxes translating into a less than proportionate increase in nominal (real) spending for Kenya and South Africa, and a more than proportionate increase in nominal (real) spending for Nigeria. Fiscal imbalance is not a threat in the budgetary process in Kenya and South Africa, but an issue of concern in Nigeria, where oil revenues are a major source of support for budget short falls. Journal: International Economic Journal Pages: 267-282 Issue: 2 Volume: 24 Year: 2010 Keywords: Autoregressive distributed lag error-correction model, taxes, spending, causality, cointegration, X-DOI: 10.1080/10168730903510674 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903510674 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:2:p:267-282 Template-Type: ReDIF-Article 1.0 Author-Name: Alan Deardorff Author-X-Name-First: Alan Author-X-Name-Last: Deardorff Author-Name: Jee-Hyeong Park Author-X-Name-First: Jee-Hyeong Author-X-Name-Last: Park Title: A Story of Trade-induced Industrialization Abstract: We offer a simple variant of the standard Heckscher-Ohlin Model that explains how a developing country, by opening up to trade with a large capital-abundant economy, can be induced to shift resources into more capital-intensive production than that which it was producing in autarky. As a result, it experiences a rise in its return to capital and, if capital is internationally mobile, both an increase in its capital stock and an increase in trade. These results arise in a model in which both a traditional and a modern sector can produce final goods that are perfect substitutes. The modern sector uses intermediate inputs that differ in their relative capital intensities, while being both more capital intensive than the traditional sector. The results of this model accord well with the experience of the Asian Tiger economies during the early decades of their export-oriented industrialization. Journal: International Economic Journal Pages: 283-296 Issue: 3 Volume: 24 Year: 2010 Keywords: Industrialization, trade, intermediate inputs, Heckscher-Ohlin Model, Asian Tiger economies, X-DOI: 10.1080/10168737.2010.503457 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.503457 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:3:p:283-296 Template-Type: ReDIF-Article 1.0 Author-Name: Ayman Reda Author-X-Name-First: Ayman Author-X-Name-Last: Reda Title: Religious and Economic Preferences: An Empirical Analysis of State Tax Rates and Public Spending Abstract: In an attempt to examine the role of religion and religious institutions in the formation of economic and political preferences, we empirically test the relationship between religious and economic variables in the context of the 50 US states. Specifically, we test whether changes in the religious composition of states over time influences state tax rates (public revenue), and state spending patterns (public expenditure). We use church membership rates and religious contributions as alternative measures of a state's religiosity level. The results report a weak relationship between state tax rates and the religiosity of the state population over time. However, a negative relationship was observed between religiosity and public welfare spending, and a positive relationship between religiosity and public education spending. Variations arise when Catholics are included in the analysis of public spending. Journal: International Economic Journal Pages: 297-316 Issue: 3 Volume: 24 Year: 2010 Keywords: Denomination, liberal, conservative, religion, government, X-DOI: 10.1080/10168737.2010.503452 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.503452 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:3:p:297-316 Template-Type: ReDIF-Article 1.0 Author-Name: Jorge Andraz Author-X-Name-First: Jorge Author-X-Name-Last: Andraz Author-Name: Nelia Norte Author-X-Name-First: Nelia Author-X-Name-Last: Norte Title: Are the Portuguese Regions Converging to a Single Steady State? Abstract: This paper is concerned with examining the economic performance of the Portuguese regions Nuts III. In particular, it seeks to present empirical evidence about the degree of convergence in their economic performance since 1990 when regions became the recipients of the European Community Structural Funds. Panel data regressions are estimated and the results suggest structural differences among regions leading to the existence of different steady state levels of income. Moreover, regions are converging to different steady states at an annual rate of 2.15%. As a corollary, results suggest that national policies, while contributing to improving the country's living standards relative to the European average, might not have been able to achieve the economic cohesion of the country. Journal: International Economic Journal Pages: 317-327 Issue: 3 Volume: 24 Year: 2010 Keywords: Convergence, steady-state, fixed and random effects, Portugal, X-DOI: 10.1080/10168737.2010.503460 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.503460 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:3:p:317-327 Template-Type: ReDIF-Article 1.0 Author-Name: Sunku Hahn Author-X-Name-First: Sunku Author-X-Name-Last: Hahn Author-Name: Song-Uk Kim Author-X-Name-First: Song-Uk Author-X-Name-Last: Kim Title: A Pre-purchase Product Trial of a Monopolist with Multiple Products Abstract: For the heterogeneous consumers who do not know their individual utilities from a new product, a pre-purchase product trial would be helpful. We found out that a monopoly firm with two similar products would have a strong incentive not to allow a pre-purchase product trial, even though it is socially optimal to allow it. Furthermore, it is more likely for a monopoly firm with a pre-purchase product trial policy to introduce a new product to the market when introducing a new product is socially optimal. Journal: International Economic Journal Pages: 329-342 Issue: 3 Volume: 24 Year: 2010 Keywords: Monopoly, product trial, heterogeneous consumers, X-DOI: 10.1080/10168737.2010.503585 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.503585 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:3:p:329-342 Template-Type: ReDIF-Article 1.0 Author-Name: Yaya Keho Author-X-Name-First: Yaya Author-X-Name-Last: Keho Title: Effect of Financial Development on Economic Growth: Does Inflation Matter? Time Series Evidence from the UEMOA Countries Abstract: An important issue in the finance and growth literature is whether the strength of the relationship between finance and growth may depend on inflation rate. This paper uses time-series data to examine this evidence for seven African countries. The technique of principal component analysis is used to construct an overall index for financial development. This summary measure is used to estimate nonlinear growth equations. The empirical findings did not provide significant evidence of nonlinearity in the finance-growth relationship. Financial development has no significant effect on economic growth regardless of the level of inflation. Journal: International Economic Journal Pages: 343-355 Issue: 3 Volume: 24 Year: 2010 Keywords: Financial development, economic growth, inflation, threshold effects, X-DOI: 10.1080/10168730903502416 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903502416 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:3:p:343-355 Template-Type: ReDIF-Article 1.0 Author-Name: Mark David Witte Author-X-Name-First: Mark David Author-X-Name-Last: Witte Title: Currency Invoicing: The Role of 'Herding' and Exchange Rate Volatility Abstract: This paper analyzes an individual firm's choice of invoicing currency under exchange rate volatility. Greater exchange rate volatility amplifies the representative firm's desire to 'herd' relative to all other considerations that may affect the currency denomination decision. By 'herding' a firm chooses a currency of denomination so that the firm's price and the competition's price are affected by the exchange rate in a similar manner. Contrary to previous research, the results herein suggest that individual firms may invoice in a relatively volatile currency as long as its competitor's invoice in the same volatile currency. Journal: International Economic Journal Pages: 357-374 Issue: 3 Volume: 24 Year: 2010 Keywords: Currency invoicing, exchange rate, vehicle currency, price adjustment, menu costs, X-DOI: 10.1080/10168730903510666 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168730903510666 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:3:p:357-374 Template-Type: ReDIF-Article 1.0 Author-Name: Young Wook Han Author-X-Name-First: Young Wook Author-X-Name-Last: Han Title: The Effects of US Macroeconomic Surprises on the Intraday Movements of Foreign Exchange Rates: Cases of USD-EUR and USD-JPY Exchange Rates Abstract: This paper characterizes the intraday dynamics of the high frequency US Dollar (USD)-Euro (EUR) and US Dollar (USD)-Japanese Yen (JPY) foreign exchange rates that have been subject to macroeconomic fundamentals. Even though the FIGARCH model with a normality assumption is found to be a good starting point, it appears to be inappropriate to represent the underlying movements of the high frequency returns due to the occurrences of jumps. Hence, this paper relies on the FIGARCH model with the mixture distribution that allows for the time-varying jumps that are determined by the US macroeconomic surprises. This paper generally finds that the US macroeconomic surprises are closely related to the intraday movements in the volatility process of the high frequency returns process through the jumps. In particular, the US macroeconomic surprises appear to affect the movements in the volatility process of the foreign exchange rates asymmetrically depending on the signs of the surprises and spuriously increasing the long memory persistence in the volatility process due to the jumps. Journal: International Economic Journal Pages: 375-396 Issue: 3 Volume: 24 Year: 2010 Keywords: Intraday foreign exchange rates, time-varying jumps, FIGARCH, long memory property, US macroeconomic surprises, mixture distribution, X-DOI: 10.1080/10168737.2010.504777 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.504777 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:3:p:375-396 Template-Type: ReDIF-Article 1.0 Author-Name: Ching-Chuan Tsong Author-X-Name-First: Ching-Chuan Author-X-Name-Last: Tsong Title: Are Real Exchange Rates Mean Reverting in Developing Economies in Asia? A Covariate Stationarity Approach Abstract: Previous studies on the stationarity properties of the real exchange rates in developing countries in Asia have generally produced mixed results. The unit root behavior is puzzling because it contradicts the purchasing power parity (PPP) hypothesis. This study examines international data on 15 developing countries by employing the covariate stationarity test proposed by Jansson (2004). The covariates used are motivated by economic theory, including inflation, money supply, income and current account. Our results show strong evidence in support of the hypothesis. On the contrary, the unit root test with the alternative hypothesis of nonlinear mean reversion provides inadequate evidence in favor of PPP. Journal: International Economic Journal Pages: 397-412 Issue: 3 Volume: 24 Year: 2010 Keywords: Real exchange rate, purchasing power parity, covariate stationarity test, X-DOI: 10.1080/10168737.2010.504778 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.504778 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:3:p:397-412 Template-Type: ReDIF-Article 1.0 Author-Name: Hans-Georg Petersen Author-X-Name-First: Hans-Georg Author-X-Name-Last: Petersen Author-Name: Ulrich Thiessen Author-X-Name-First: Ulrich Author-X-Name-Last: Thiessen Title: Editors' Introduction: Shadow Economy in High Income Countries - Much Ado about Nothing? Abstract: Journal: International Economic Journal Pages: 413-419 Issue: 4 Volume: 24 Year: 2010 X-DOI: 10.1080/10168737.2010.525970 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.525970 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:4:p:413-419 Template-Type: ReDIF-Article 1.0 Author-Name: Hans-Georg Petersen Author-X-Name-First: Hans-Georg Author-X-Name-Last: Petersen Author-Name: Ulrich Thiessen Author-X-Name-First: Ulrich Author-X-Name-Last: Thiessen Author-Name: Pierre Wohlleben Author-X-Name-First: Pierre Author-X-Name-Last: Wohlleben Title: Shadow Economy, Tax Evasion, and Transfer Fraud - Definition, Measurement, and Data Problems Abstract: The paper tries to shed some light on the definition of the shadow economy, in order to separate shadow activities from market activities and household production. A total income concept is applied, which is based on the labor force being engaged in market, shadow and household activities. Based on such a clear concept, tax evasion can be defined and identified in the market sector and is also usually taking place in the shadow economy, where it is often accompanied by evasion of social security contributions as well as transfer fraud. Money usage in the three sectors is then critically analyzed, and measurement as well as data problems are seriously taken into consideration. The results of our research project suggest that the size of the shadow economy as estimated with the currency approach often yields the highest possible values. Other approaches and plausibility considerations produce much lower values, which seem to be much more realistic. Consequently, policy considerations to strengthen the control mechanisms should be met with utmost skepticism. Journal: International Economic Journal Pages: 421-441 Issue: 4 Volume: 24 Year: 2010 Keywords: Shadow economy, total income concept, currency approach, money velocity, payment habits, tax evasion, transfer fraud, X-DOI: 10.1080/10168737.2010.525973 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.525973 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:4:p:421-441 Template-Type: ReDIF-Article 1.0 Author-Name: Friedrich Schneider Author-X-Name-First: Friedrich Author-X-Name-Last: Schneider Author-Name: Andreas Buehn Author-X-Name-First: Andreas Author-X-Name-Last: Buehn Author-Name: Claudio Montenegro Author-X-Name-First: Claudio Author-X-Name-Last: Montenegro Title: New Estimates for the Shadow Economies all over the World Abstract: This paper presents estimations of the shadow economies for 162 countries, including developing, Eastern European, Central Asian, and high income OECD countries over 1999 to 2006/2007. According to our estimations, the weighted average size of the shadow economy (as a percentage of 'official' GDP) in Sub-Saharan Africa is 37.6%, in Europe and Central Asia (mostly transition countries) 36.4% and in high income OECD countries 13.4%. We find that an increased burden of taxation (direct and indirect ones), combined with (labour market) regulations and the quality of public goods and services as well as the state of the 'official' economy are the driving forces of the shadow economy. Journal: International Economic Journal Pages: 443-461 Issue: 4 Volume: 24 Year: 2010 Keywords: Shadow economy of 162 countries, tax burden, quality of state institutions, regulation, MIMIC model, X-DOI: 10.1080/10168737.2010.525974 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.525974 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:4:p:443-461 Template-Type: ReDIF-Article 1.0 Author-Name: Bernard Fortin Author-X-Name-First: Bernard Author-X-Name-Last: Fortin Author-Name: Guy Lacroix Author-X-Name-First: Guy Author-X-Name-Last: Lacroix Author-Name: Dominique Pinard Author-X-Name-First: Dominique Author-X-Name-Last: Pinard Title: Evaluation of the Underground Economy in Quebec: A Microeconomic Approach Abstract: The main purpose of this paper is to estimate the size and the growth of Quebec's underground economy, and the corresponding loss of taxes for the government. Our approach is based on a method developed by Pissarides and Weber (1989) and extended by Lyssiotou et al. (2004). The basic hypothesis is that individuals can under-report their earnings from self-employment but not from paid work, from which taxes are directly deducted. We estimate a consumer demand system in which the marginal propensity to consume is allowed to vary with the two types of earnings. We next estimate the amount of self-employment earnings that are under-reported. From this estimate, we calculate the relative size of the underground economy in Quebec. We use data from Statistics Canada's Survey of Household Spending. According to our results, Quebec's underground economy amounted to 4.6% of GDP in 1997 and increased slightly to 5.7% in 2002. For the government, this represents approximately $3.3 billion in forgone taxes for the year 2002. This estimate is very close to those reported by Gervais (1994) and Fortin and Lacroix (2009) using very different estimation methods and data. Journal: International Economic Journal Pages: 463-479 Issue: 4 Volume: 24 Year: 2010 Keywords: Underground economy, demand system, household behaviour, generalized methods of moments, tax evasion, self-employment income, X-DOI: 10.1080/10168737.2010.525983 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.525983 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:4:p:463-479 Template-Type: ReDIF-Article 1.0 Author-Name: Ulrich Thiessen Author-X-Name-First: Ulrich Author-X-Name-Last: Thiessen Title: The Shadow Economy in International Comparison: Options for Economic Policy Derived from an OECD Panel Analysis Abstract: Building on new behavioral theories, using a data set of about 450 variables and augmenting the Sala-i-Martin definition of robustness, we find evidence in support of the hypothesis that the standard causes of the shadow economy (SE), taxes, the administrative burden and labor market regulations, are not per se crucial in determining the size of the SE. Many of the robust influences emanate from relatively new theories such as elements of direct democracy, social interaction effects, and happiness, and from the institutional literature on the relative importance of specific institutions for economic performance. Most of them can well be affected by governments. Hence, if one believes the SE to be a problem in high income industrial countries, governments could address it through many ways, including their own behavior. And these could be more successful than a strategy built on more government control, increased punishment and less freedom, as adopted by some OECD countries. Simulations of the size of the SE demonstrate their sensitivity to the required velocity assumption and show that previous estimates, including those of the so-called Mimic model, appear to be based on very high velocity assumptions. A moderate velocity assumption yields macro estimates of the SE consistent with the micro evidence, i.e. not more than a few percent of official GDP. Finally, for the first time, we separate the relatively large 'crime-related' shadow activity from the 'non-criminal' one. Journal: International Economic Journal Pages: 481-509 Issue: 4 Volume: 24 Year: 2010 Keywords: Shadow economy, currency and mimic method, policy response, X-DOI: 10.1080/10168737.2010.525986 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.525986 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:4:p:481-509 Template-Type: ReDIF-Article 1.0 Author-Name: Marcus Ruge Author-X-Name-First: Marcus Author-X-Name-Last: Ruge Title: Determinants and Size of the Shadow Economy - A Structural Equation Model Abstract: The main objective of this paper is to analyze the determinants of the shadow economy within a coherent Structural Equation Model using a data set of 11 latent variables with 58 indicators from 35 countries. The shadow economy is closely connected to its determinants; a higher wealth and development level, a better administrative system, lower taxes and social security payments and the extent of labor market regulations determine the level of shadow economy. Germany ranks 16th of 35 countries by shadow economy, with a score of 3.6, with the best being New Zealand, 1.0, and the worst Romania, 10. Journal: International Economic Journal Pages: 511-523 Issue: 4 Volume: 24 Year: 2010 Keywords: Shadow economy, tax system, labor system, SEM, PLS, X-DOI: 10.1080/10168737.2010.525988 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.525988 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:4:p:511-523 Template-Type: ReDIF-Article 1.0 Author-Name: Kari Takala Author-X-Name-First: Kari Author-X-Name-Last: Takala Author-Name: Matti Viren Author-X-Name-First: Matti Author-X-Name-Last: Viren Title: Is Cash Used Only in the Shadow Economy? Abstract: This paper analyzes the use of cash in the Euro area. It attempts to give at least a partial answer to the question of whether cash is predominantly used in the shadow economy and whether, consequently, the behavior of cash balances is useful in monitoring changes in the shadow economy. The paper shows that - contrary to what is often assumed - recent developments in cash demand (including changes in denomination structure) can be fairly well explained by certain economic and institutional factors. Changes in cash demand do not seem to correspond to changes in existing measures of the shadow economy, nor do cross-country comparisons reveal close correspondence. Journal: International Economic Journal Pages: 525-540 Issue: 4 Volume: 24 Year: 2010 Keywords: Shadow economy, cash demand, hoarding, interest rates, X-DOI: 10.1080/10168737.2010.525992 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.525992 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:4:p:525-540 Template-Type: ReDIF-Article 1.0 Author-Name: Sascha Hokamp Author-X-Name-First: Sascha Author-X-Name-Last: Hokamp Author-Name: Michael Pickhardt Author-X-Name-First: Michael Author-X-Name-Last: Pickhardt Title: Income Tax Evasion in a Society of Heterogeneous Agents - Evidence from an Agent-based Model Abstract: We analyze the evolution and extent of income tax evasion under alternative governmental policies in an agent-based model with heterogeneous agents. A novel aspect of our modeling is the use of an exponential utility function, which allows us to assume rather realistic audit probabilities and to yield more realistic results with respect to the extent of tax evasion. Further, the introduction of lapse of time effects constitutes another novel aspect of our model. Among other things, the model allows for assessing the impact of alternative policies on tax evasion. Subject to the model features, we find that ethical norms and lapse of time effects reduce the extent of tax evasion particularly strongly. Journal: International Economic Journal Pages: 541-553 Issue: 4 Volume: 24 Year: 2010 Keywords: Income tax evasion, heterogeneous population, lapse of time, ethical behavior, agent-based models, X-DOI: 10.1080/10168737.2010.525994 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.525994 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:4:p:541-553 Template-Type: ReDIF-Article 1.0 Author-Name: Dominik Enste Author-X-Name-First: Dominik Author-X-Name-Last: Enste Title: Shadow Economy - The Impact of Regulation in OECD-countries Abstract: A comprehensive regulation index covering five major fields (labour, product and capital market; education/innovation and the quality of institutions) has been used to analyse the relationship between the density of regulations and the size of shadow economies. The empirical results from 25 OECD countries for the time period 1995-2005 show that - apart from tax burden and tax morale - the main causes are labour and product market regulations, overall regulations and poor quality of official public institutions and administration. An overview of relevant findings on the impact of regulation on irregular activities complements these findings. Journal: International Economic Journal Pages: 555-571 Issue: 4 Volume: 24 Year: 2010 Keywords: Regulation, quality of institutions, shadow economy, underground economy, random effects models, X-DOI: 10.1080/10168737.2010.525996 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.525996 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:4:p:555-571 Template-Type: ReDIF-Article 1.0 Author-Name: Catalina Granda-Carvajal Author-X-Name-First: Catalina Author-X-Name-Last: Granda-Carvajal Title: The Unofficial Economy and the Business Cycle: A Test for Theories Abstract: The shadow economy is an extensive phenomenon worldwide. It poses several questions, the consequences of fluctuations in economic activity being among the major ones. Based on official data, this paper establishes a set of cyclical properties of macroeconomic aggregates and studies how these vary across countries with the size of the unofficial sector. Through comparisons with the existing literature on business cycles in economies featuring underground activities, the obtained 'stylized facts' are used to test the relevance of theoretical predictions on the influence of the shadow economy. Using this procedure allows us to confirm that the evidence is not entirely of the sort suggested in business cycle models. In particular, some important macro aggregates and cyclical properties have been neglected in the analysis altogether, while others have been paid too much attention for no apparent empirical reason. Some possible avenues for future research can be drawn from this exercise. Journal: International Economic Journal Pages: 573-586 Issue: 4 Volume: 24 Year: 2010 Keywords: Shadow economy, business cycles, model evaluation, X-DOI: 10.1080/10168737.2010.525998 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.525998 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:4:p:573-586 Template-Type: ReDIF-Article 1.0 Author-Name: Gaetano Lisi Author-X-Name-First: Gaetano Author-X-Name-Last: Lisi Author-Name: Maurizio Pugno Author-X-Name-First: Maurizio Author-X-Name-Last: Pugno Title: Entrepreneurship and the Hidden Economy: An Extended Matching Model Abstract: This paper develops a labour market matching model in order to address the problem of the persistence of the hidden sector and of its regional concentration, as in Italy and in the enlarged Europe. The main novel features of the model are that entrepreneurial ability affects job productivity, and that regular firms receive negative externalities from the hidden sector, which may capture the pressure typically exerted by corruption and organised crime, and positive externalities from the other regular firms. At least one interior equilibrium emerges, thus providing an explanation for the so-called 'shadow puzzle', with the possibility that tougher monitoring may reduce both the hidden sector and unemployment. If externalities are non-linear, two equilibria may emerge, thus accounting for regional dualism. The 'better' equilibrium is in fact characterised by a smaller hidden sector, higher levels of overall productivity, output, entrepreneurial ability used, extra-profits, relative wages, and more favourable externalities. Journal: International Economic Journal Pages: 587-605 Issue: 4 Volume: 24 Year: 2010 Keywords: Entrepreneurship, hidden economy, shadow economy, underground economy, matching models, X-DOI: 10.1080/10168737.2010.526000 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.526000 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:4:p:587-605 Template-Type: ReDIF-Article 1.0 Author-Name: Stephan Muehlbacher Author-X-Name-First: Stephan Author-X-Name-Last: Muehlbacher Author-Name: Erich Kirchler Author-X-Name-First: Erich Author-X-Name-Last: Kirchler Title: Tax Compliance by Trust and Power of Authorities Abstract: The following is a summary of Kirchler et al.'s (2008a) framework for tax compliance. The 'slippery slope' framework distinguishes two forms of compliance. Whereas voluntary compliance is driven by trust in tax authorities, enforced compliance depends on the power of authorities. It is assumed, however, that the interplay of trust and power is crucial for both forms of compliance. The framework serves as a guideline for tax research and tax policy. Journal: International Economic Journal Pages: 607-610 Issue: 4 Volume: 24 Year: 2010 Keywords: Tax compliance, trust, power, X-DOI: 10.1080/10168737.2010.526005 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.526005 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:4:p:607-610 Template-Type: ReDIF-Article 1.0 Author-Name: Claudio Quintano Author-X-Name-First: Claudio Author-X-Name-Last: Quintano Author-Name: Paolo Mazzocchi Author-X-Name-First: Paolo Author-X-Name-Last: Mazzocchi Title: Some Alternative Estimates of Underground Economies in 12 New EU Member States Abstract: This paper investigates alternative estimates of the Non-Observed Economy (NOE) for 12 new European Union (EU) Member Countries during the transition period by an exploration of the reliability of the Gross Domestic Product (GDP) figures. The authors analyze several methodologies applied in various countries performing the Eurostat (2005) Pilot Projects on the Exhaustiveness (PPE); having in mind the different methods of measuring the shadow economy, the authors examine the relationship between selected economic aggregates to estimate the size and growth of the unrecorded sector using the Latent Variable Method to validate - as far as available - the official data, and to quantify the NOE phenomenon. The empirical results obtained by using this different estimation method do not reveal the same convergence as the national statistical offices have shown. These experiences include, to various degrees, the lack of coverage being dependent on the different types of underground economic activities. Journal: International Economic Journal Pages: 611-628 Issue: 4 Volume: 24 Year: 2010 Keywords: Underground economy, latent variable method, X-DOI: 10.1080/10168737.2010.526007 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.526007 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:4:p:611-628 Template-Type: ReDIF-Article 1.0 Author-Name: Egle Tafenau Author-X-Name-First: Egle Author-X-Name-Last: Tafenau Author-Name: Helmut Herwartz Author-X-Name-First: Helmut Author-X-Name-Last: Herwartz Author-Name: Friedrich Schneider Author-X-Name-First: Friedrich Author-X-Name-Last: Schneider Title: Regional Estimates of the Shadow Economy in Europe Abstract: The aim of the paper is to estimate the extent of the shadow economy in the regions of the European Union. For this purpose the multiple-indicators multiple-causes approach combined with elements of spatial econometrics is implemented. The analysis shows that the shadow economy is most extensive in Eastern and Southern Europe, confirming results from previous literature. Within countries, the poorest regions tend to exhibit the highest shadow economy quotas. The smallest extent of shadow activities is obtained for the Netherlands and the United Kingdom, while in Poland the shadow economy is most extensive. Journal: International Economic Journal Pages: 629-636 Issue: 4 Volume: 24 Year: 2010 Keywords: Shadow economy, European Union, MIMIC modelling, spatial effects, X-DOI: 10.1080/10168737.2010.526010 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.526010 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:24:y:2010:i:4:p:629-636 Template-Type: ReDIF-Article 1.0 Author-Name: Jaymin Lee Author-X-Name-First: Jaymin Author-X-Name-Last: Lee Title: The Performance of Industrial Policy: Evidence from Korea Abstract: This paper first shows that Korea implemented industrial policy properly, promoting infant industries rather than mature ones. The paper then shows that infant industries promoted by industrial policy have matured over time, as well as grown faster than mature industries not promoted by industrial policy. However, this happened as industrial policy was being lifted, rather than as it was being implemented. The paper also shows that, although industrial policy may pay off more easily than previously thought, Korean industrial policy fails to pay off because it distorted the price mechanism too severely and for too long. The analysis of the paper suggests that industrial policy in latecomer countries, when implemented to address market failure, should be much more moderate than what Korea implemented. Journal: International Economic Journal Pages: 1-27 Issue: 1 Volume: 25 Year: 2011 Keywords: Industrial policy, infant industry, cost-benefit analysis, protection, subsidy, X-DOI: 10.1080/10168737.2011.550122 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2011.550122 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:1:p:1-27 Template-Type: ReDIF-Article 1.0 Author-Name: Chiara Broccolini Author-X-Name-First: Chiara Author-X-Name-Last: Broccolini Author-Name: Alessia Lo Turco Author-X-Name-First: Alessia Author-X-Name-Last: Lo Turco Author-Name: Andrea Presbitero Author-X-Name-First: Andrea Author-X-Name-Last: Presbitero Author-Name: Stefano Staffolani Author-X-Name-First: Stefano Author-X-Name-Last: Staffolani Title: Individual Earnings, International Outsourcing and Technological Change: Evidence from Italy Abstract: The aim of this paper is to evaluate empirically the relative effects of international outsourcing of materials and services and of ICT capital deepening on wage inequality between blue and white collars in the Italian manufacturing industry during the period 1985-1999. We merge an administrative data set on workers' wages and individual characteristics with data on imported inputs from Italian input-output tables and other sector-level variables. Our results confirm that both material and service outsourcing widen the skilled/unskilled wage gap while ICT capital deepening positively affects real wages regardless of the worker's status. However, important differences emerge when the overall sample is split between traditional and innovative sectors. Journal: International Economic Journal Pages: 29-46 Issue: 1 Volume: 25 Year: 2011 Keywords: International outsourcing, ICT, wage inequality, X-DOI: 10.1080/10168731003658744 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168731003658744 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:1:p:29-46 Template-Type: ReDIF-Article 1.0 Author-Name: Rangan Gupta Author-X-Name-First: Rangan Author-X-Name-Last: Gupta Title: Currency Substitution and Financial Repression Abstract: In this paper, we use a general equilibrium overlapping generations monetary endogenous growth model of a small open economy, to analyze whether financial repression, measured via the 'high' mandatory reserve-deposit requirements of financial intermediaries, is an optimal response of a consolidated government following an increase in the degree of currency substitution. We find that higher currency substitution can yield higher reserve requirements, but the result depends crucially on how the consumer weighs money in the utility function relative to domestic and foreign consumptions, and also the size of the government. Journal: International Economic Journal Pages: 47-61 Issue: 1 Volume: 25 Year: 2011 Keywords: Currency substitution, endogenous growth models, financial repression, small open economy, public finance, X-DOI: 10.1080/10168731003753875 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168731003753875 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:1:p:47-61 Template-Type: ReDIF-Article 1.0 Author-Name: Denis Kan Author-X-Name-First: Denis Author-X-Name-Last: Kan Author-Name: Bernadette Andreosso-O'Callaghan Author-X-Name-First: Bernadette Author-X-Name-Last: Andreosso-O'Callaghan Author-Name: Helena Lenihan Author-X-Name-First: Helena Author-X-Name-Last: Lenihan Title: Assessing the Feasibility of Monetary Integration in the Former Soviet Republics Abstract: The disintegration of the USSR brought with it a turbulent period of transition for the newly emerged independent states. This initiated a process of economic decentralisation and a re-allocation of resources. Various regional formations aiming to create a single market or even a common currency area have been proposed amongst the former Soviet states. Despite this, very little in terms of economic integration has been achieved so far. Economies within the CIS are divergent in terms of size and economic structure, with external shocks being more prominent for regional countries. The empirical analysis provided here examines the sustainability of optimum currency area arrangements within the CIS. The results present weak evidence to support monetary arrangements in the region, nonetheless some evidence was found for Russia-Belarus and to some extent Russia-Kazakhstan. Russia remains the dominant, most diversified and advanced economy in the region. In the case of a monetary union with regional countries, the union is likely to happen by absorption. External shocks have divergent effects on regional countries; the differences to a large extent are attributed to the magnitude of responses, further weakening the argument in favour of the OCA in the region. Journal: International Economic Journal Pages: 63-89 Issue: 1 Volume: 25 Year: 2011 Keywords: Optimum currency area, CIS, integration, X-DOI: 10.1080/10168737.2010.487538 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.487538 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:1:p:63-89 Template-Type: ReDIF-Article 1.0 Author-Name: Carlos Ibarra Author-X-Name-First: Carlos Author-X-Name-Last: Ibarra Title: Monetary Policy and Real Currency Appreciation: A BEER Model for the Mexican Peso Abstract: A notable feature of the Mexican economy since the late 1980s was the persistent real appreciation of the peso. The appreciation - a key development that helps to explain Mexico's slow rate of economic growth - took place despite changes in the exchange-rate regime, yet with an unchanging focus of monetary policy on gradually reducing the inflation rate. Thus, the frequent assumption that only real-side variables (as opposed to monetary ones) have a lasting or 'long-run' effect on the real exchange may not suit the recent Mexican case. The paper presents the results of an econometric study of exchange rate determination in Mexico for the period 1990Q1-2006Q4. The study is based on the so-called BEER (Behavioral Equilibrium Exchange Rate) model, which relies on Johansen's cointegration methodology and jointly considers real-side and monetary determinants. The estimation results - in the form of two- and three-equation cointegration models - show that, controlling for the influence of real-side determinants, the peso-dollar interest differential had a statistically and economically significant long-run effect on the peso's real exchange rate. Journal: International Economic Journal Pages: 91-110 Issue: 1 Volume: 25 Year: 2011 Keywords: Real currency appreciation, real exchange rate, monetary policy, Mexican peso, BEER model, Johansen's cointegration methodology, X-DOI: 10.1080/10168737.2010.487539 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.487539 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:1:p:91-110 Template-Type: ReDIF-Article 1.0 Author-Name: George Ford Author-X-Name-First: George Author-X-Name-Last: Ford Author-Name: Thomas Koutsky Author-X-Name-First: Thomas Author-X-Name-Last: Koutsky Author-Name: Lawrence Spiwak Author-X-Name-First: Lawrence Author-X-Name-Last: Spiwak Title: The Frontier of Broadband Adoption Across the OECD: A Comparison of Performance Abstract: We assess the performance and efficiency of OECD countries with respect to broadband Internet subscription. Using the econometric techniques of Least Squares and Stochastic Frontier Analysis, we estimate scores indicating the efficiency with which a country converts its economic and demographic endowments into broadband subscriptions. With very few exceptions, we find that broadband subscription in OECD countries is consistent with those endowments - about two thirds of OECD countries have an efficiency rate of 90% or better. We find that economic and demographic endowments explain nearly all of the variation in broadband subscriptions (85%). This finding suggests that public policy's role for broadband adoption should be targeted at improving or mitigating the adverse effects of underlying demographic and economic conditions, such as computer ownership and education programs. Journal: International Economic Journal Pages: 111-123 Issue: 1 Volume: 25 Year: 2011 Keywords: Internet, OECD, stochastic frontier analysis, broadband, telecommunications, economic development, X-DOI: 10.1080/10168737.2010.487540 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.487540 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:1:p:111-123 Template-Type: ReDIF-Article 1.0 Author-Name: Marcelo Sanchez Author-X-Name-First: Marcelo Author-X-Name-Last: Sanchez Title: Modelling Anti-inflationary Monetary Targeting in Romania Abstract: This paper characterises Romania's experience with anti-inflationary monetary targeting over the period 1999-2005 prior to the country's switch to inflation targeting. We uncover the National Bank of Romania's preferences, conditional on an estimated macro-model. We find that Romania's monetary targeting regime can be characterised by a concern for price stability and an additional role for smoothing of the central bank's instrument (base money growth). Exchange rate variability and output gap stability appear not to significantly enter the National Bank of Romania's objective function. Journal: International Economic Journal Pages: 125-145 Issue: 1 Volume: 25 Year: 2011 Keywords: Monetary targeting, optimal monetary policy, Romania, X-DOI: 10.1080/10168737.2010.487541 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.487541 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:1:p:125-145 Template-Type: ReDIF-Article 1.0 Author-Name: Germana Corrado Author-X-Name-First: Germana Author-X-Name-Last: Corrado Title: Modeling Guarantees, Over-Indebtedness and Financial Crises in an Open Economy Abstract: This work develops a simple framework to analyse how financial intermediaries' balance sheet problems combined with financial guarantees make an economy more vulnerable to financial crises. A 'double default' problem - that is, the default of financial intermediaries on their debt repayments and of the government on its guarantees to bailout intermediaries' losses - is modelled in this study. The possibility of multiple equilibria, including a crisis equilibrium where the government is not able or willing to honor its guarantees towards the domestic financial sector, arises from the interplay of all the above elements: financial intermediaries' level of indebtedness, government implicit guarantees and high-risk creditors' lending. This work also produces predictions concerning the vulnerability to a financial crisis: multiple equilibria are possible only in certain ranges of the fundamentals. Journal: International Economic Journal Pages: 147-172 Issue: 1 Volume: 25 Year: 2011 Keywords: Financial guarantees, risk premium, multiple equilibria, X-DOI: 10.1080/10168737.2010.487542 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.487542 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:1:p:147-172 Template-Type: ReDIF-Article 1.0 Author-Name: Rebeca Jimenez-Rodriguez Author-X-Name-First: Rebeca Author-X-Name-Last: Jimenez-Rodriguez Title: Macroeconomic Structure and Oil Price Shocks at the Industrial Level Abstract: This paper analyses the role of the macroeconomic structure in the response of industrial output to an oil price shock in six OECD countries. The modelling of the macroeconomic structure is important in examining the effect of an oil price shock on the industry-level output, since the analysis of the transmission mechanisms helps us to better understand the response of industrial output to such a shock. Thus, cross-country differences found in the responses of industrial output to oil price shocks within the European Monetary Union can be partially explained by differences in the transmission mechanisms of such shocks. Journal: International Economic Journal Pages: 173-189 Issue: 1 Volume: 25 Year: 2011 Keywords: Oil price shock, identified VAR, manufacturing industries, X-DOI: 10.1080/10168737.2010.487913 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.487913 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:1:p:173-189 Template-Type: ReDIF-Article 1.0 Author-Name: Mohammad Kabir Author-X-Name-First: Mohammad Author-X-Name-Last: Kabir Author-Name: Ruhul Salim Author-X-Name-First: Ruhul Author-X-Name-Last: Salim Title: Analysing Potential Effects of Preferential Liberalisation in Some Asian Emerging Economies Abstract: This paper examines the ex-ante effects of possible trade liberalisation of some Asian emerging economies through forming a regional economic bloc called BIMSTEC by adopting SMART and GTAP models. Based on estimated export supply elasticity, the results of SMART simulation reveal that the highest net trade effect takes place for India, the biggest economy in the bloc, followed by Bangladesh for tariff elimination. The two countries also derive substantial welfare gains. The proportionate revenue loss is remarkably higher for smaller countries such as Nepal, Myanmar and Bangladesh. GTAP simulation suggests that Bangladesh incurs a net welfare loss by joining the FTA. The overall intra-bloc export is likely to increase. These results imply that there is a need for designing proper compensation mechanism and technical support for the smaller economies to offset the possible adverse effects. Journal: International Economic Journal Pages: 191-213 Issue: 2 Volume: 25 Year: 2011 Keywords: Regionalization, trade liberalization, economic modelling, X-DOI: 10.1080/10168737.2011.586805 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2011.586805 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:2:p:191-213 Template-Type: ReDIF-Article 1.0 Author-Name: Mantu Kumar Mahalik Author-X-Name-First: Mantu Kumar Author-X-Name-Last: Mahalik Author-Name: Hrushikesh Mallick Author-X-Name-First: Hrushikesh Author-X-Name-Last: Mallick Title: What Causes Asset Price Bubble in an Emerging Economy? Some Empirical Evidence in the Housing Sector of India Abstract: This study examines the dynamic causal relationships between house prices and their five determinants - real income, short-run real interest rates, real stock price index, real effective exchange rate, and real non-food bank credit - by using the quarterly data from 1996:Q1 to 2007:Q1 for India. Using the cointegration test and the vector error-correction model (VECM), the study finds that in the long run, real income significantly and positively influences the housing prices while real non-food bank credit adversely influences it. The variance decomposition results suggest that it is the shocks to the non-food bank credit that mainly explains the variability in housing prices, besides its own shocks being the most influential while other factors are not significant. This suggests that the role of credit availability as a supply side determinant cannot be underestimated in the dynamic behaviour of housing prices in emerging economies. Journal: International Economic Journal Pages: 215-237 Issue: 2 Volume: 25 Year: 2011 Keywords: Housing price, stock price, interest rate, bank credit, exchange rate, X-DOI: 10.1080/10168737.2011.586806 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2011.586806 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:2:p:215-237 Template-Type: ReDIF-Article 1.0 Author-Name: Shu-Ling Chen Author-X-Name-First: Shu-Ling Author-X-Name-Last: Chen Author-Name: Hyeongwoo Kim Author-X-Name-First: Hyeongwoo Author-X-Name-Last: Kim Title: Nonlinear Mean Reversion across National Stock Markets: Evidence from Emerging Asian Markets Abstract: This paper seeks empirical evidence of nonlinear mean-reversion in relative national stock price indices for Emerging Asian countries. It is well known that conventional linear unit root tests suffer from low power against the stationary nonlinear alternative. Implementing the nonlinear unit root tests proposed by Kapetanios et al. (2003) and Cerrato et al. (2009) for the relative stock prices of Emerging Asian markets, we find strong evidence of nonlinear mean reversion, whereas linear tests fail to reject the unit root null for most cases. We also report some evidence that stock markets in China and Taiwan are highly localized. Journal: International Economic Journal Pages: 239-250 Issue: 2 Volume: 25 Year: 2011 Keywords: Linear unit root test, nonlinear unit root test, nonlinear panel unit root test, international relative stock prices, X-DOI: 10.1080/10168737.2011.580569 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2011.580569 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:2:p:239-250 Template-Type: ReDIF-Article 1.0 Author-Name: Tuck Cheong Tang Author-X-Name-First: Tuck Author-X-Name-Last: Cheong Tang Author-Name: Koi Nyen Wong Author-X-Name-First: Koi Nyen Author-X-Name-Last: Wong Title: Foreign Direct Investment, Merchandise and Services Trade in a Transition Economy: The Case of Cambodia Abstract: Since the liberalization of trade and investment in the 1990s, inward foreign direct investment (FDI) has been seen to play a greater role in forging trade flows, integration into the regional and international markets and economic development for a transition economy such as Cambodia. Despite her recent progress in attracting FDI and fostering trade, the direction of causality between inward FDI, exports and imports of merchandise as well as services has not been empirically explored. The findings show that inward FDI not only can promote both merchandise and services exports but also indicate the presence of backward and forward linkages, which could result in positive externalities. However, based on the impulse response analysis, it seems that merchandise exports are more vulnerable than services exports to an unanticipated shift in FDI inflows in the medium run. Journal: International Economic Journal Pages: 251-267 Issue: 2 Volume: 25 Year: 2011 Keywords: Causality, Cambodia, trade, foreign direct investment, X-DOI: 10.1080/10168737.2011.580581 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2011.580581 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:2:p:251-267 Template-Type: ReDIF-Article 1.0 Author-Name: Toru Kikuchi Author-X-Name-First: Toru Author-X-Name-Last: Kikuchi Author-Name: Kazumichi Iwasa Author-X-Name-First: Kazumichi Author-X-Name-Last: Iwasa Title: Competing Industrial Standards and the Impact of Trade Liberalization Abstract: The main purpose of this study is to illustrate, with simple trade theory, the relationship between competing industrial standards and trade liberalization. We assume that there are two competing industrial standards in an international context, each of which applies to a group of differentiated products. A product can be used only in combination with other products based on the same industrial standard. We examine the impact of trade liberalization (i.e., a decline in trade costs) on consumers' choice of a standard. It will be shown that the degree of indirect network effects, captured with substitution between differentiated products, plays an important role as a determinant of the impact of trade liberalization. Journal: International Economic Journal Pages: 269-284 Issue: 2 Volume: 25 Year: 2011 Keywords: Competing industrial standards, trade liberalization, X-DOI: 10.1080/10168737.2011.587380 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2011.587380 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:2:p:269-284 Template-Type: ReDIF-Article 1.0 Author-Name: Barbara Annicchiarico Author-X-Name-First: Barbara Author-X-Name-Last: Annicchiarico Author-Name: Giancarlo Marini Author-X-Name-First: Giancarlo Author-X-Name-Last: Marini Author-Name: Giovanni Piersanti Author-X-Name-First: Giovanni Author-X-Name-Last: Piersanti Title: Budget Deficits and Exchange-Rate Crises Abstract: This paper investigates currency crises in an optimizing general equilibrium model with overlapping generations. It is shown that a rise in government budget deficits financed by future taxes generates a decumulation of external assets, leading up to a speculative attack and forcing the monetary authorities to abandon the peg. Journal: International Economic Journal Pages: 285-303 Issue: 2 Volume: 25 Year: 2011 Keywords: Budget deficits, foreign exchange reserves, currency crises, X-DOI: 10.1080/10168737.2010.504779 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.504779 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:2:p:285-303 Template-Type: ReDIF-Article 1.0 Author-Name: I- Ming Chiu Author-X-Name-First: I- Ming Author-X-Name-Last: Chiu Author-Name: Tetsuji Yamada Author-X-Name-First: Tetsuji Author-X-Name-Last: Yamada Author-Name: Chia-Ching Chen Author-X-Name-First: Chia-Ching Author-X-Name-Last: Chen Title: Health and Income Variation - A Panel Data Study on the Developed and Less Developed Economies Abstract: In this paper, human capital in the form of 'health status' is introduced into a neoclassical economic growth model as one of the main factors differentiating rich and poor countries. Various panel data models are used to examine how health and other growth factors affect average income in different countries. Our main empirical finding indicates that a one-year increase in life expectancy (the health status measure) raises GDP per capita by 0.5-0.9%. Based on this result, a baseline health status can be established to help poor countries achieve a targeted economic growth rate. Journal: International Economic Journal Pages: 305-318 Issue: 2 Volume: 25 Year: 2011 Keywords: Health, GDP per capita, neoclassical economic growth model, panel data models, X-DOI: 10.1080/10168737.2010.504217 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.504217 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:2:p:305-318 Template-Type: ReDIF-Article 1.0 Author-Name: Sofiane Ghali Author-X-Name-First: Sofiane Author-X-Name-Last: Ghali Author-Name: Sami Rezgui Author-X-Name-First: Sami Author-X-Name-Last: Rezgui Title: FDI Contribution to Technical Efficiency in the Tunisian Manufacturing Sector: Evidence from Micro-panel Data Abstract: This paper investigates the contribution of FDI to firms' technical efficiency based on a two-stage empirical method. Using panel data for 674 firms belonging to the Tunisian manufacturing sector and observed over the period 1997-2001, a bootstrap procedure is applied to correct for serial correlation affecting DEA technical efficiency scores estimated in a first stage. Results obtained from second-stage regressions show that FDI presence at the firm level has a positive effect on its technical efficiency. However, horizontal FDI spillovers are not evidenced while sectoral export activity represents a potential source of technology spillovers for local firms. Journal: International Economic Journal Pages: 319-339 Issue: 2 Volume: 25 Year: 2011 Keywords: FDI, technical efficiency, technology spillovers, two-stage estimation, bootstrap, X-DOI: 10.1080/10168737.2010.504215 File-URL: http://www.tandfonline.com/doi/abs/10.1080/10168737.2010.504215 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:2:p:319-339 Template-Type: ReDIF-Article 1.0 Author-Name: Hiroyuki Taguchi Author-X-Name-First: Hiroyuki Author-X-Name-Last: Taguchi Title: Currency Regime and Monetary Autonomy. Empirical Evidence Using Recent and Global Data from 1990 to 2007 Abstract: This paper analyzes the exchange rate regimes from the perspective of monetary independence. To be specific, using recent and global data, we examine the sensitivity of domestic interest rates to the international interest rate, by conducting co-integration tests and by estimating the adjustment speeds through error-correction model, for different de facto currency regimes and for different types of capital markets. Our estimation results basically support the traditional views of ‘impossible trinity’, as far as the cases with open capital markets are concerned. The floating regime shows the less sensitivity of domestic interest rates to the international interest rate than the fixed regime does, which implies some capacity for domestic monetary autonomy under the floating regime. The cases with closed capital markets, on the other hand, include the cases showing high sensitivity of interest rates in some emerging market economies, which might imply the ‘fear of floating’ hypothesis. Journal: International Economic Journal Pages: 341-358 Issue: 3 Volume: 25 Year: 2010 Month: 10 X-DOI: 10.1080/10168737.2011.607255 File-URL: http://hdl.handle.net/10.1080/10168737.2011.607255 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:3:p:341-358 Template-Type: ReDIF-Article 1.0 Author-Name: Ki Young Park Author-X-Name-First: Ki Young Author-X-Name-Last: Park Title: Asymmetric Exchange Rates and Unofficial Exchange Rate Interventions: The Case of South Korea Abstract: Applying Milton Friedman's ‘plucking’ model of output fluctuations, we investigate the behavior of the Korean won/dollar exchange rate using a state-space model with Markov switching, which incorporates both symmetric and asymmetric shocks. We find that the Korean won/US dollar exchange rate rarely falls below its trend, but is plucked upward from time to time by transitory shocks. This asymmetry suggests that the monetary authority unofficially intervenes in the foreign exchange market to support its own target level from below. Further evidence from changes in reserve assets indirectly supports our finding. Journal: International Economic Journal Pages: 359-371 Issue: 3 Volume: 25 Year: 2010 Month: 7 X-DOI: 10.1080/10168737.2011.607259 File-URL: http://hdl.handle.net/10.1080/10168737.2011.607259 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:3:p:359-371 Template-Type: ReDIF-Article 1.0 Author-Name: Thomas H.W. Ziesemer Author-X-Name-First: Thomas H.W. Author-X-Name-Last: Ziesemer Title: Developing Countries’ Net-migration: The Impact of Economic Opportunities, Disasters, Conflicts, and Political Instability Abstract: We provide regressions for the net immigration flows of developing countries. We show that (i) savings finance emigration and worker remittances serve to make staying rather than migrating possible; (ii) lagged dependent migration flows have a negative sign in the presence of migration stock variables; (iii) stocks of migrants in six OECD countries and in the developing countries have non-linear effects. Some of the non-linear effects of the economic variables vanish if indicators for disasters, conflicts and political instability are taken into account but new ones come in for these latter variables. Journal: International Economic Journal Pages: 373-386 Issue: 3 Volume: 25 Year: 2010 Month: 6 X-DOI: 10.1080/10168737.2011.607258 File-URL: http://hdl.handle.net/10.1080/10168737.2011.607258 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:3:p:373-386 Template-Type: ReDIF-Article 1.0 Author-Name: Salvador Contreras Author-X-Name-First: Salvador Author-X-Name-Last: Contreras Title: Parental Quality Investment, Child Effort, and Human Capital Accumulation Abstract: This paper develops a theoretical model that explores the effects of child investment on human capital accumulation. Household investment effects are measured as a function of quality of investment choices, time allocation, child effort, and spillover effects. The theory dynamics are derived by employing a two-period OLG model. The model dynamics reveal the existence of multiple steady states of quality investment and child human capital accumulation under two stages of development. These dynamics show why poor households are often unable to escape poverty. Empirically, the theory and dynamics are tested with United States data. The data suggest that for poor households, income and parental human capital have no significant effect on child performance at school. Child effort and parental quality investment are shown to be significant determinants of child performance at school across household types. Journal: International Economic Journal Pages: 387-417 Issue: 3 Volume: 25 Year: 2010 Month: 6 X-DOI: 10.1080/10168737.2010.505246 File-URL: http://hdl.handle.net/10.1080/10168737.2010.505246 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:3:p:387-417 Template-Type: ReDIF-Article 1.0 Author-Name: Jørgen Drud Hansen Author-X-Name-First: Jørgen Drud Author-X-Name-Last: Hansen Author-Name: Jørgen Ulff-Møller Nielsen Author-X-Name-First: Jørgen Ulff-Møller Author-X-Name-Last: Nielsen Title: Price as an Indicator for Quality in International Trade? Abstract: This paper examines the relation between price differences and quality differences in an oligopoly model with intra-industry trade, where goods are horizontally as well as vertically differentiated. The analysis demonstrates that the ratio of prices is not linked to the ratio of qualities in any simple way. The paper therefore questions empirical trade studies using unit values as an indicator for the quality of the traded goods. However, we also show that the ratio of prices is a reasonable proxy for the ratio of qualities if sunk cost is dominating in the cost structure. Journal: International Economic Journal Pages: 419-430 Issue: 3 Volume: 25 Year: 2010 Month: 4 X-DOI: 10.1080/10168737.2011.580580 File-URL: http://hdl.handle.net/10.1080/10168737.2011.580580 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:3:p:419-430 Template-Type: ReDIF-Article 1.0 Author-Name: Juan Sol� Author-X-Name-First: Juan Author-X-Name-Last: Sol� Title: Interest Rate Defenses of Currency Pegs Abstract: This paper studies a policy often used to defend currency pegs: raising short-term interest rates to stem demand for foreign reserves. Yet, this mechanism is absent from most monetary models. This paper develops a model with asset market frictions where this policy can be effective. The friction I emphasize is as in Lucas (1990): the need of liquidity for asset transactions. When the government raises domestic interest rates, agents increase their domestic currency holdings in order to acquire interest-bearing domestic assets, instead of increasing their demand for the central bank's reserves, and thus the peg survives. The model shows that, while interest rate defenses can be successful, they may impose great costs for domestic agents; hence governments’ reluctance to sustain this policy for long periods. Finally, the general equilibrium nature of the model allows computing the welfare cost of this policy. Journal: International Economic Journal Pages: 431-464 Issue: 3 Volume: 25 Year: 2010 Month: 7 X-DOI: 10.1080/10168737.2010.509403 File-URL: http://hdl.handle.net/10.1080/10168737.2010.509403 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:3:p:431-464 Template-Type: ReDIF-Article 1.0 Author-Name: Alfredo M. Pereira Author-X-Name-First: Alfredo M. Author-X-Name-Last: Pereira Author-Name: Jorge M. Andraz Author-X-Name-First: Jorge M. Author-X-Name-Last: Andraz Title: On the Economic and Fiscal Effects of Investments in Road Infrastructures in Portugal Abstract: The objective of this paper is to investigate the economic and fiscal impact of road infrastructure investment in Portugal, focusing on the effects for each administrative region of both local investments and investments in other regions. We estimate VAR models for the national economy as well as for each of the five regions, and using the associated impulse-response functions we find that investment in road infrastructures has been a powerful instrument to increase private investment, to create new permanent jobs and to promote long-term growth in all regions. More importantly, investment in road infrastructure, both at the aggregate level and for each one of the five regions, generates fiscal effects that largely exceed the initial investment itself. Accordingly, there is no trade-off in the long-term between the potentially positive economic effects and the potentially negative budgetary effects of such investments, i.e., both economic and budgetary effects are positive. As a corollary, policies that would reduce current road investment as a response to the current budgetary concerns will result in lower long-term growth as well as worse budgetary conditions in the future. Journal: International Economic Journal Pages: 465-492 Issue: 3 Volume: 25 Year: 2010 Month: 9 X-DOI: 10.1080/10168737.2011.607256 File-URL: http://hdl.handle.net/10.1080/10168737.2011.607256 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:3:p:465-492 Template-Type: ReDIF-Article 1.0 Author-Name: Koichi Kagitani Author-X-Name-First: Koichi Author-X-Name-Last: Kagitani Title: Domestic Unionization and the Political Economy of Strategic Export Policy Abstract: This paper examines the effect of lobbying by a labor union and its parent firm on the argument for strategic export policy in a third market-unionized duopoly. The lobbying-induced export policy frequently deteriorates domestic welfare as compared with free trade. It is true that the politically-determined export policy can improve domestic welfare if the union's bargaining power is strong and the domestic government's responsiveness to political contributions is weak. However, even if the conditions are met, implementing the lobbying-induced export policy will not enhance domestic welfare more than improving labor--management relations. Moreover, the improvement of their relations will be hampered by the opportunity of their lobbying. These results indicate that strategic export policy toward a unionized duopoly should be restrained in light of political economy. Journal: International Economic Journal Pages: 493-512 Issue: 3 Volume: 25 Year: 2010 Month: 10 X-DOI: 10.1080/10168737.2011.607257 File-URL: http://hdl.handle.net/10.1080/10168737.2011.607257 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:3:p:493-512 Template-Type: ReDIF-Article 1.0 Author-Name: Jee-Hyeong Park Author-X-Name-First: Jee-Hyeong Author-X-Name-Last: Park Title: Trade-induced Industrialization and Economic Growth Abstract: Based on a modified Heckscher-Ohlin model of Deardorff and Park (2010), this paper develops a dynamic model of trade-induced industrialization and economic growth. It shows that a developing country may grow out of its autarky steady state with no industrialization into a new steady state with full industrialization by opening to trade with a large industrialized country, exporting the labor-intensive intermediate input in exchange for the capital-intensive intermediate input for the modern good. Even when the developing country is on its path toward complete industrialization under autarky, free trade may induce it to grow faster with its return to capital being raised and sustained at a level that is higher than its autarky level during its industrialization process. Once it completes its industrialization process by having all of its resources in the modern sector, then diminishing returns to capital come back to accompany further capital accumulation, slowing down the growth of the economy. This trade-induced industrialization and economic growth, having an expansion of international trade both in its absolute value and in its ratio to the size of the developing country, correspond well with the dynamic profiles of East Asian Miracle countries’ economic growth based on their export-oriented industrialization strategy. Journal: International Economic Journal Pages: 513-545 Issue: 3 Volume: 25 Year: 2010 Month: 7 X-DOI: 10.1080/10168737.2011.607251 File-URL: http://hdl.handle.net/10.1080/10168737.2011.607251 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:3:p:513-545 Template-Type: ReDIF-Article 1.0 Author-Name: Jong-Wha Lee Author-X-Name-First: Jong-Wha Author-X-Name-Last: Lee Author-Name: Kwanho Shin Author-X-Name-First: Kwanho Author-X-Name-Last: Shin Title: Introduction Journal: International Economic Journal Pages: 547-551 Issue: 4 Volume: 25 Year: 2011 Month: 12 X-DOI: 10.1080/10168737.2011.633808 File-URL: http://hdl.handle.net/10.1080/10168737.2011.633808 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:4:p:547-551 Template-Type: ReDIF-Article 1.0 Author-Name: Takatoshi Ito Author-X-Name-First: Takatoshi Author-X-Name-Last: Ito Title: Reform of Financial Supervisory and Regulatory Regimes: What has Been Achieved and What is Still Missing Abstract: Weak financial supervision was partly responsible for the Global Financial Crisis (GFC) of 2007--2009. The liquidity risk in the special purpose subsidiaries was not well recognized in regulation; there were large financial institutions that escaped rigorous supervision; and the concept of ‘too-big-to-fail’ caused moral hazard in management. This paper examines whether these shortcomings were adequately addressed in the post-crisis reform of the global financial architecture. The United States overhauled the supervision framework, which includes shifting supervision authorities of systemically important financial institutions (SIFIs) to the Federal Reserve and increasing capital requirement on those SIFIs. Similar reforms of supervision frameworks have been implemented in European countries. The Bank of International Settlements (BIS) also proposed Basle III, significantly increasing capital requirements, and modifying risk weights. Despite all these efforts, one key component on the reform agenda is not adequately addressed, namely the procedure to have an orderly resolution mechanism for a large financial institution. Without the procedure, the too-big-to-fail problem will continue to cast a shadow over the global financial architecture. Journal: International Economic Journal Pages: 553-569 Issue: 4 Volume: 25 Year: 2011 Month: 12 X-DOI: 10.1080/10168737.2011.636620 File-URL: http://hdl.handle.net/10.1080/10168737.2011.636620 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:4:p:553-569 Template-Type: ReDIF-Article 1.0 Author-Name: Cheolbeom Park Author-X-Name-First: Cheolbeom Author-X-Name-Last: Park Title: Comments on ‘Reform of Financial Supervisory and Regulatory Regimes: What has Been Achieved and What is Still Missing’ by Takatoshi Ito Journal: International Economic Journal Pages: 571-572 Issue: 4 Volume: 25 Year: 2011 Month: 12 X-DOI: 10.1080/10168737.2011.636621 File-URL: http://hdl.handle.net/10.1080/10168737.2011.636621 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:4:p:571-572 Template-Type: ReDIF-Article 1.0 Author-Name: Soyoung Kim Author-X-Name-First: Soyoung Author-X-Name-Last: Kim Author-Name: Doo Yong Yang Author-X-Name-First: Doo Author-X-Name-Last: Yong Yang Title: Financial and Monetary Cooperation in Asia: Challenges after the Global Financial Crisis Abstract: This paper reviews recent developments in regional financial and monetary cooperation in East Asia, and suggests some issues that could contribute to more constructive development in the future. The regional monetary and financial cooperation was originally motivated by the Asian financial crisis, but it has faced new challenges due to some recent events, such as the global financial crisis and global imbalances. We review recent developments of regional financial and monetary cooperation in East Asia, such as CMIM, ABMI and ABF, and regional surveillance mechanisms. We argue that there are several issues to be discussed in developing more effective regional financial and monetary cooperation: including developing CMIM to be effective in preventing future crisis, linking regional cooperation with global financial architecture properly, constructing effective surveillance mechanism, and strengthening regional policy dialogue. Journal: International Economic Journal Pages: 573-587 Issue: 4 Volume: 25 Year: 2011 Month: 12 X-DOI: 10.1080/10168737.2011.636622 File-URL: http://hdl.handle.net/10.1080/10168737.2011.636622 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:4:p:573-587 Template-Type: ReDIF-Article 1.0 Author-Name: David Cook Author-X-Name-First: David Author-X-Name-Last: Cook Title: Comments on ‘Financial and Monetary Cooperation in Asia: Challenges after the Global Financial Crisis’ by Soyoung Kim and Doo Yong Yang Journal: International Economic Journal Pages: 589-591 Issue: 4 Volume: 25 Year: 2011 Month: 12 X-DOI: 10.1080/10168737.2011.636623 File-URL: http://hdl.handle.net/10.1080/10168737.2011.636623 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:4:p:589-591 Template-Type: ReDIF-Article 1.0 Author-Name: Giovanni Capannelli Author-X-Name-First: Giovanni Author-X-Name-Last: Capannelli Title: Shaping Asia's Institutional Architecture for Economic and Financial Integration: Opinion Leaders’ Views Abstract: Asian economic regionalism has emerged from a bottom-up process, driven by market forces in the absence of a grand plan for regional integration. While the financial crisis of 1997/98 triggered new regional cooperation initiatives, more recently several Asian political leaders have formulated proposals for the creation of a regional economic community, suggesting the possible start of a top-down approach. Based on the results of a survey of Asia's opinion leaders conducted by the Asian Development Bank (ADB) in 2010, this paper discusses how Asia's institutional architecture for economic and financial integration is taking shape, suggesting the need to strengthen existing institutions that promote Asian regionalism and to create new ones. While the focus of the paper is on monetary and financial integration, the analysis also covers other integration pillars such as trade and investment, connectivity and infrastructure, and regional public goods. It suggests the need to create new institutions in support of Asian regionalism and to use a broad perspective in moving towards the formation of a region-wide economic community based on strong political commitment and grassroots participation. Journal: International Economic Journal Pages: 593-616 Issue: 4 Volume: 25 Year: 2011 Month: 12 X-DOI: 10.1080/10168737.2011.636624 File-URL: http://hdl.handle.net/10.1080/10168737.2011.636624 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:4:p:593-616 Template-Type: ReDIF-Article 1.0 Author-Name: Doo Yong Yang Author-X-Name-First: Doo Yong Author-X-Name-Last: Yang Title: Comments on ‘Shaping Asia's Institutional Architecture for Economic and Financial Integration: Opinion Leaders’ Views’ by Giovanni Capannelli Journal: International Economic Journal Pages: 617-618 Issue: 4 Volume: 25 Year: 2011 Month: 12 X-DOI: 10.1080/10168737.2011.636625 File-URL: http://hdl.handle.net/10.1080/10168737.2011.636625 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:4:p:617-618 Template-Type: ReDIF-Article 1.0 Author-Name: Juthathip Jongwanich Author-X-Name-First: Juthathip Author-X-Name-Last: Jongwanich Author-Name: Maria Socorro Gochoco-Bautista Author-X-Name-First: Maria Socorro Author-X-Name-Last: Gochoco-Bautista Author-Name: Jong-Wha Lee Author-X-Name-First: Jong-Wha Author-X-Name-Last: Lee Title: When are Capital Controls Effective? Evidence from Malaysia and Thailand Abstract: This study examines the impact of capital controls using monthly information to construct higher-frequency, quarterly indexes for Malaysia and Thailand over the period 2000--2010 in a Vector Auto-Regression (VAR) model. The results show that effectiveness of a capital control policy is not identical between Malaysia and Thailand. This could result from country-specific factors, the form of capital controls as well as degree of efficacy, which vary greatly between these two countries. Restrictions in Thailand have no significant effect on inflows but are especially effective for outflows, particularly foreign direct investment. In Malaysia, capital relaxation tends to have a significant impact on inward foreign direct investment and portfolio inflows. However, the results show that changes in capital account policies do not have a significant impact on the real exchange rate in both Malaysia and Thailand. Journal: International Economic Journal Pages: 619-651 Issue: 4 Volume: 25 Year: 2011 Month: 12 X-DOI: 10.1080/10168737.2011.636626 File-URL: http://hdl.handle.net/10.1080/10168737.2011.636626 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:4:p:619-651 Template-Type: ReDIF-Article 1.0 Author-Name: Kiseok Hong Author-X-Name-First: Kiseok Author-X-Name-Last: Hong Title: Comments on `When Are Capital Controls Effective? Evidence from Malaysia and Thailand' by Juthathip Jongwanich et al. Journal: International Economic Journal Pages: 653-654 Issue: 4 Volume: 25 Year: 2011 Month: 12 X-DOI: 10.1080/10168737.2011.636627 File-URL: http://hdl.handle.net/10.1080/10168737.2011.636627 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:4:p:653-654 Template-Type: ReDIF-Article 1.0 Author-Name: Rogelio V. Mercado Author-X-Name-First: Rogelio V. Author-X-Name-Last: Mercado Author-Name: Cyn-Young Park Author-X-Name-First: Cyn-Young Author-X-Name-Last: Park Title: What Drives Different Types of Capital Flows and their Volatilities in Developing Asia? Abstract: Understanding the determinants of capital inflows is essential to designing an effective policy framework to manage volatile capital flows and their disruptive potential. This paper aims to identify factors that explain the size and volatility of various types of capital flows to developing Asia, vis-à-vis other emerging market economies. The estimates for a panel dataset show that per capita income growth, trade openness, and change in stock market capitalization are important determinants of capital inflows to developing Asia. Trade openness increases the volatility of all types of capital inflows; while change in stock market capitalization, global liquidity growth and institutional quality lowers the volatility. A regional factor plays an important role in determining the size and volatility of capital inflows in emerging Europe and emerging Latin America, suggesting that regional economic cooperation and policy coordination may be an important element in designing a policy framework to manage capital inflows. Journal: International Economic Journal Pages: 655-680 Issue: 4 Volume: 25 Year: 2011 Month: 12 X-DOI: 10.1080/10168737.2011.636628 File-URL: http://hdl.handle.net/10.1080/10168737.2011.636628 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:4:p:655-680 Template-Type: ReDIF-Article 1.0 Author-Name: Dong-Eun Rhee Author-X-Name-First: Dong-Eun Author-X-Name-Last: Rhee Title: Comments on ‘What Drives Different Types of Capital Flows and Their Volatilities in Developing Asia?’ by Rogelio V. Mercado, Jr. and Cyn-Young Park Journal: International Economic Journal Pages: 681-682 Issue: 4 Volume: 25 Year: 2011 Month: 12 X-DOI: 10.1080/10168737.2011.636629 File-URL: http://hdl.handle.net/10.1080/10168737.2011.636629 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:4:p:681-682 Template-Type: ReDIF-Article 1.0 Author-Name: Michael B. Devereux Author-X-Name-First: Michael B. Author-X-Name-Last: Devereux Author-Name: Doris Poon Author-X-Name-First: Doris Author-X-Name-Last: Poon Title: Monetary Policy in Economic Crises: A Simple Model of Policy with External Financial Constraints Abstract: The experience of economic crises in emerging market economies suggests that the operation of monetary policy in these economies is severely limited by the presence of financial constraints. This is seen in the tendency to follow contractionary monetary policy during crises, and the observation that these countries pursue much more stable exchange rates than do high income advanced economies, despite having a more volatile external environment. This paper analyzes the use of monetary policy in an open economy in which exchange rate sensitive collateral constraints may bind in some states of the world. The appeal of the model is that it allows for a complete analytical description of the effects of collateral constraints, and admits a full characterization of welfare-maximizing monetary policy rules. The model can explain two empirical features of emerging market monetary policy described above -- in particular, that optimal monetary policy may be pro-cyclical under binding collateral constraints, and an economy with large external shocks may favor a fixed exchange rate, even though flexible exchange rates are preferred when external shocks are smaller. Journal: International Economic Journal Pages: 683-711 Issue: 4 Volume: 25 Year: 2011 Month: 12 X-DOI: 10.1080/10168737.2011.636630 File-URL: http://hdl.handle.net/10.1080/10168737.2011.636630 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:4:p:683-711 Template-Type: ReDIF-Article 1.0 Author-Name: Yongseung Jung Author-X-Name-First: Yongseung Author-X-Name-Last: Jung Title: Comments on ‘Monetary Policy in Economic Crises: A Simple Model of Policy with External Financial Constraints’ by Devereux and Poon Abstract: The recent financial crises have generated interest in the design of optimal monetary policy rules not only for the developed economies, but also for the emerging economies. In particular, many economists have argued that economic models should take financial market frictions more seriously to analyze the propagation of external shocks and to design the optimal monetary policy rules at normal times as well as at economic crisis. Devereux and Poon address this issue by employing a tractable and simple small open economy model. Journal: International Economic Journal Pages: 713-716 Issue: 4 Volume: 25 Year: 2011 Month: 12 X-DOI: 10.1080/10168737.2011.636631 File-URL: http://hdl.handle.net/10.1080/10168737.2011.636631 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:4:p:713-716 Template-Type: ReDIF-Article 1.0 Author-Name: Byung Yoon Bae Author-X-Name-First: Byung Yoon Author-X-Name-Last: Bae Author-Name: Dong Heon Kim Author-X-Name-First: Dong Heon Author-X-Name-Last: Kim Title: Global and Regional Yield Curve Dynamics and Interactions: The Case of Some Asian Countries Abstract: Since the Asian financial crisis in 1997--98, Asian countries have made continuous efforts to promote monetary and financial cooperation for developing regionally well-established bond markets. This paper empirically evaluates the developments of bond markets in the East-Asia region based on the recently developed empirical methodology of dynamic cross-country bond yield interactions. To this end, we use a two-step state space model to examine the existence of the global and regional factor and analyze the effect of both factors on four Asian countries’ yield curves. We find that both global and regional factors play an important role in explaining these countries’ yield factors, although the regional factor appears to have a smaller role than the global factor and that this result seems to be robust to different subsamples. We interpret this result as evidence on the existence of the regional commonality and on endeavors toward Asian bond markets. Journal: International Economic Journal Pages: 717-738 Issue: 4 Volume: 25 Year: 2011 Month: 12 X-DOI: 10.1080/10168737.2011.636632 File-URL: http://hdl.handle.net/10.1080/10168737.2011.636632 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:4:p:717-738 Template-Type: ReDIF-Article 1.0 Author-Name: Maria Socorro Gochoco-Bautista Author-X-Name-First: Maria Socorro Author-X-Name-Last: Gochoco-Bautista Title: Comments on ‘Global and Regional Yield Curve Dynamics and Interactions: The Case of Some Asian Countries’ by Byung Yoon Bae & Dong Heon Kim Journal: International Economic Journal Pages: 739-740 Issue: 4 Volume: 25 Year: 2011 Month: 12 X-DOI: 10.1080/10168737.2011.636633 File-URL: http://hdl.handle.net/10.1080/10168737.2011.636633 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:25:y:2011:i:4:p:739-740 Template-Type: ReDIF-Article 1.0 Author-Name: Tidiane Kinda Author-X-Name-First: Tidiane Author-X-Name-Last: Kinda Title: On the Drivers of FDI and Portfolio Investment: A Simultaneous Equations Approach Abstract: This paper assesses the drivers of Foreign Direct Investment (FDI) and portfolio investment using simultaneous equations, which control for the correlation between the two components of private capital flows. The results show that in addition to infrastructure and financial development, capital control and economic growth significantly explain private capital flows in developing countries. The paper also highlights that the impact of financial development on portfolio investment is nonlinear. Indeed, lax monetary policy and excessive credit provision could weaken the financial system and significantly reduce portfolio investment flows in the long run. Journal: International Economic Journal Pages: 1-22 Issue: 1 Volume: 26 Year: 2012 Month: 11 X-DOI: 10.1080/10168737.2010.538428 File-URL: http://hdl.handle.net/10.1080/10168737.2010.538428 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:1:p:1-22 Template-Type: ReDIF-Article 1.0 Author-Name: Tomomi Miyazaki Author-X-Name-First: Tomomi Author-X-Name-Last: Miyazaki Title: On the Determinants of Fiscal Adjustment Abstract: This paper examines the role that fragmentation of the government's fiscal policymaking process plays in determining the size (or performance) of deficit reductions during periods of fiscal adjustment. The results show that the fiscal target is effective for reducing public deficits during periods of fiscal adjustment in European countries. However, in non-European countries the political leadership of single-party majority governments is the key determinant of deficit reduction. Journal: International Economic Journal Pages: 23-36 Issue: 1 Volume: 26 Year: 2012 Month: 9 X-DOI: 10.1080/10168737.2012.653223 File-URL: http://hdl.handle.net/10.1080/10168737.2012.653223 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:1:p:23-36 Template-Type: ReDIF-Article 1.0 Author-Name: Lenard Lieb Author-X-Name-First: Lenard Author-X-Name-Last: Lieb Title: Taking Real Wage Rigidities Seriously: Implications for Optimal Policy Design in a Currency Union Abstract: This paper analyzes optimal monetary and fiscal policy in a monetary union from a union-wide perspective, using a multi-country New Keynesian business-cycle model with rigid real wages. Fiscal policy is implemented at the country level through decisions regarding government spending, while the monetary authority sets a common nominal interest rate. It is found that in the presence of country-specific shocks as well as symmetric shocks, there is a country-level trade-off between stabilizing inflation and the output gap. After a union-wide shock, the common monetary authority also faces a trade-off. If shocks are symmetric, the optimal union-wide policy requires that the common central bank conduct a countercyclical policy, allowing for more relative inflation volatility than the amount actually allowed by the ECB. The role of policies is reversed at the domestic level, where the government stabilizes the economy via a countercyclical policy, regardless of whether shocks are symmetric. Journal: International Economic Journal Pages: 37-68 Issue: 1 Volume: 26 Year: 2012 Month: 9 X-DOI: 10.1080/10168737.2010.525792 File-URL: http://hdl.handle.net/10.1080/10168737.2010.525792 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:1:p:37-68 Template-Type: ReDIF-Article 1.0 Author-Name: Chang Woon Nam Author-X-Name-First: Chang Woon Author-X-Name-Last: Nam Title: Corporate Tax Incentives for R&D Investment in OECD Countries Abstract: Differentiating internal equity from debt finance, this study examines the generosity of R&D-specific tax incentives in OECD countries based on an NPV model. The corporate tax system generally favours debt finance and some previous findings on the possible preponderance of internal equity for financing R&D investment cannot be explained in relation to R&D-specific tax concessions. The OECD comparison demonstrates that R&D tax allowances adopted in the Czech Republic, Belgium, the UK, Denmark, Hungary, Austria and Australia generated the most substantial tax savings in 2006. Combined with such incentives, the after-tax NPV increases with the corporate tax rate, suggesting stronger investment stimulation through a tax-rate-increase-cum-base-broadening policy. Journal: International Economic Journal Pages: 69-84 Issue: 1 Volume: 26 Year: 2012 Month: 9 X-DOI: 10.1080/10168737.2010.526624 File-URL: http://hdl.handle.net/10.1080/10168737.2010.526624 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:1:p:69-84 Template-Type: ReDIF-Article 1.0 Author-Name: Lota Tamini Author-X-Name-First: Lota Author-X-Name-Last: Tamini Author-Name: Pascal Ghazalian Author-X-Name-First: Pascal Author-X-Name-Last: Ghazalian Author-Name: Jean-Philippe Gervais Author-X-Name-First: Jean-Philippe Author-X-Name-Last: Gervais Author-Name: Bruno Larue Author-X-Name-First: Bruno Author-X-Name-Last: Larue Title: Trade Liberalization in Primary and Processed Agricultural Products: Should Developing Countries Favour Tariff or Domestic Support Reductions? Abstract: Developing Countries (DCs) have remained firm in the current WTO negotiations regarding their demand for significant agricultural trade liberalization. This stance has undoubtedly delayed the conclusion of the Doha Round and one might wonder whether DCs are not depriving themselves from valuable gains from trade by holding out. In line with the theory of second best, we show that too little liberalization could be immiserizing for DCs through numerical simulations of a three-country theoretical trade model of primary agricultural commodities and processed foods. Our model departs from most other models by accounting for vertical linkages and by linking welfare outcomes to parameterized supply-side rigidities at the farm level, which imply that primary goods cannot be substituted costlessly across export destinations, and imperfect substitution between processed foods. While in simpler models DCs can get larger welfare gains from multilateral tariff reductions than from domestic support reductions, our simulations show that this instrument ranking can be reversed. Under a wide range of parameter values, the DC would support a trade agreement only if the latter calls for ambitious tariff cuts. This outcome is consistent with the positions of DCs in the current round of multilateral negotiations over agriculture. Journal: International Economic Journal Pages: 85-107 Issue: 1 Volume: 26 Year: 2012 Month: 9 X-DOI: 10.1080/10168737.2010.526954 File-URL: http://hdl.handle.net/10.1080/10168737.2010.526954 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:1:p:85-107 Template-Type: ReDIF-Article 1.0 Author-Name: David Collie Author-X-Name-First: David Author-X-Name-Last: Collie Title: Immiserizing Growth and the Metzler Paradox in the Ricardian Model Abstract: Conditions for the occurrence of immiserizing growth and the Metzler paradox are analysed in the Ricardian model when consumers in the foreign country have Leontief preferences while consumers in the home country have Cobb-Douglas preferences. By using specific functional forms, the conditions for the occurrence of the two paradoxes are defined in terms of the exogenous parameters of the model rather than endogenous variables such as the foreign import demand elasticity in the conditions of Bhagwati (1958) and Metzler (1949a, b). It is shown that the simultaneous occurrence of both paradoxical results is possible for some parameter values. Journal: International Economic Journal Pages: 141-154 Issue: 1 Volume: 26 Year: 2012 Month: 11 X-DOI: 10.1080/10168737.2010.538429 File-URL: http://hdl.handle.net/10.1080/10168737.2010.538429 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:1:p:141-154 Template-Type: ReDIF-Article 1.0 Author-Name: Dierk Herzer Author-X-Name-First: Dierk Author-X-Name-Last: Herzer Title: Outward FDI, Total Factor Productivity and Domestic Output: Evidence from Germany Abstract: This paper examines the impact of outward FDI on domestic output and total factor productivity by applying cointegration techniques to macroeconomic time series data for Germany. We find a positive relationship between outward FDI and domestic output as well as between outward FDI and total factor productivity. Furthermore, our results indicate that there is bidirectional causality between outward FDI and domestic output, and outward FDI and total factor productivity, suggesting that increased output and productivity are both a consequence and a cause of increased outward FDI. Overall, the results of this paper can be interpreted as evidence of productivity-enhancing, and thus growth-enhancing, effects of outward FDI, which is inconsistent with the simplistic idea that outward investment represents a diversion of domestic economic activity. Journal: International Economic Journal Pages: 155-174 Issue: 1 Volume: 26 Year: 2012 Month: 10 X-DOI: 10.1080/10168737.2010.538430 File-URL: http://hdl.handle.net/10.1080/10168737.2010.538430 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:1:p:155-174 Template-Type: ReDIF-Article 1.0 Author-Name: Ensar Yilmaz Author-X-Name-First: Ensar Author-X-Name-Last: Yilmaz Title: The Exchange Rate: A Shock Absorber or Source of Shocks in Turkey? Abstract: This study investigates the role of the exchange rate as shock-absorber as opposed to a source of its own shocks in Turkey during the period from 1990 to 2009 by employing a structural VAR framework with long-run and short-run restrictions. We find that the economic shocks have predominantly been asymmetric relative to one of the largest trading partner, the US. Our results provide evidence of the fact that while the major source of variability in exchange rates in the pre-2001 crisis period is mainly nominal shocks, a large proportion of the exchange rate variability can be attributed to supply and demand shocks in the post-2001 crisis period. This suggets that, rather than reacting to shocks to the foreign exchange market, such as shifts in risk premia, the exchange rate moves mainly in response to the real shocks during the post-2001 crisis period. Hence, there is a sizeable role for exchange rate stabilization during this period, absorbing those shocks and therefore requiring opposed monetary policy responses. Journal: International Economic Journal Pages: 175-188 Issue: 1 Volume: 26 Year: 2012 Month: 10 X-DOI: 10.1080/10168737.2012.653224 File-URL: http://hdl.handle.net/10.1080/10168737.2012.653224 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:1:p:175-188 Template-Type: ReDIF-Article 1.0 Author-Name: Keen Meng Choy Author-X-Name-First: Keen Meng Author-X-Name-Last: Choy Title: Trade Cycles in a Re-export Economy: The Case of Singapore Abstract: This article uses econometric methods to test the hypothesis that Singapore is a ‘re-export economy’. If the hypothesis is true, merchandize exports and imports would co-move together over the course of trade cycles while exports would be insensitive to the exchange rate due to their high import content. Impulse response analysis of a monthly structural vector error correction model incorporating these trade aggregates, proxies for external demand and relative prices affirms the empirical validity of the re-export hypothesis. Innovation accounting also suggests that growth in the worldwide semiconductor industry rather than price competitiveness is the most important factor behind's Singapore's trade expansion in the long run. Journal: International Economic Journal Pages: 189-201 Issue: 2 Volume: 26 Year: 2012 Month: 1 X-DOI: 10.1080/10168737.2012.688520 File-URL: http://hdl.handle.net/10.1080/10168737.2012.688520 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:2:p:189-201 Template-Type: ReDIF-Article 1.0 Author-Name: Yong Kim Author-X-Name-First: Yong Author-X-Name-Last: Kim Title: Hangovers Abstract: This paper analyzes a process by which a market boom brought on by a temporary increase in the flow of buyers, can subsequently lead to a collapse of liquidity (speed of sale), prices and production to levels lower than before the onset of the boom. I consider a general model of markets subject to search frictions in the matching of buyers and sellers, where the entry of buyers and sellers (through production) are subject to adjustment costs. The resulting co-movement between unemployment, inventories and sales with the production cycle matches the stylized facts. Journal: International Economic Journal Pages: 203-218 Issue: 2 Volume: 26 Year: 2012 Month: 7 X-DOI: 10.1080/10168737.2012.693325 File-URL: http://hdl.handle.net/10.1080/10168737.2012.693325 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:2:p:203-218 Template-Type: ReDIF-Article 1.0 Author-Name: Kazuyuki Nakamura Author-X-Name-First: Kazuyuki Author-X-Name-Last: Nakamura Title: A Note on Shibata's Second Neutrality Theorem in an International Trade Model Abstract: The present note reconsiders Shibata's second neutrality theorem in a model that consists of two small countries, two tradable goods, and two primary factors of production. We demonstrate that the second neutrality theorem is valid under certain conditions; that is, to mitigate the negative effects of public bads, the governments must have direct control over the factors of production. Otherwise, the theorem does not hold in general. Journal: International Economic Journal Pages: 219-228 Issue: 2 Volume: 26 Year: 2012 Month: 7 X-DOI: 10.1080/10168737.2012.688517 File-URL: http://hdl.handle.net/10.1080/10168737.2012.688517 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:2:p:219-228 Template-Type: ReDIF-Article 1.0 Author-Name: Lynda A. Porter Author-X-Name-First: Lynda A. Author-X-Name-Last: Porter Title: Asymmetric Oligopoly and Foreign Direct Investment: Implications for Host-Country Tax-Setting Abstract: We present a duopoly model with heterogeneous firms that vary in cost-efficiency, each of which can choose to serve a foreign market by either exporting or local production. We do so to analyse the effects of a host-country corporate profit tax on both the scale and composition of FDI, and find that: strategic interaction between oligopolistic firms provides for a pattern of FDI that favours cost-inefficiency to the detriment of host-country welfare; and the host-country tax rate can be optimally used to avoid such patterns of FDI and instead promote direct investment by a relatively cost-efficient firm. Journal: International Economic Journal Pages: 229-246 Issue: 2 Volume: 26 Year: 2012 Month: 6 X-DOI: 10.1080/10168737.2011.552515 File-URL: http://hdl.handle.net/10.1080/10168737.2011.552515 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:2:p:229-246 Template-Type: ReDIF-Article 1.0 Author-Name: Leila Ali Author-X-Name-First: Leila Author-X-Name-Last: Ali Title: Flexibility: Stability's Best Friend in Non-transparent Countries? Abstract: This paper proposes a framework for studying the optimal exchange rate regime in an open economy vulnerable to self-fulfilling currency crises. Model results show that the optimal regime a country's government should adopt critically depends on the country's level of transparency. Furthermore, stabilisation properties are conditional on conjectural and time-varying factors such as market sentiments, which swing according to international investors’ feelings. Thus, and paradoxically, in a weakly transparent economy, greater flexibility gives rise to a wide range of exchange-rate stability compared with hard-anchoring regimes. Key to this is the role of expectations coordination during stressful scenarios. Journal: International Economic Journal Pages: 247-264 Issue: 2 Volume: 26 Year: 2012 Month: 12 X-DOI: 10.1080/10168737.2012.687205 File-URL: http://hdl.handle.net/10.1080/10168737.2012.687205 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:2:p:247-264 Template-Type: ReDIF-Article 1.0 Author-Name: Kazuhiko Yokota Author-X-Name-First: Kazuhiko Author-X-Name-Last: Yokota Author-Name: Kung-Ming Chen Author-X-Name-First: Kung-Ming Author-X-Name-Last: Chen Title: R&D Spillovers and Foreign Market Entry: Acquisition versus Greenfield Investment Abstract: This paper presents a three-stage game to model the entry behavior of a multinational firm in the presence of R&D spillovers. The multinational firm's entry mode choice -- that is, to invest to set up a new plant or merge with a local firm -- is a function of the magnitude of spillovers, as well as the relative cost of greenfield investment, and mergers and acquisitions (M&A). Our model shows that if there exist relatively high R&D leakages and relatively small difference in cost between M&A and greenfield investment, an R&D-intensive foreign firm tends to choose greenfield investment rather than M&A, while if there exist relatively low R&D leakages, the foreign firm is more likely to choose M&A rather than greenfield investment. It is also shown that the size of social welfare of the host country depends on the degree of R&D spillovers. These results produce strong implications for antitrust policy for particularly developing countries. Journal: International Economic Journal Pages: 265-280 Issue: 2 Volume: 26 Year: 2012 Month: 12 X-DOI: 10.1080/10168737.2012.688519 File-URL: http://hdl.handle.net/10.1080/10168737.2012.688519 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:2:p:265-280 Template-Type: ReDIF-Article 1.0 Author-Name: Daehwan Kim Author-X-Name-First: Daehwan Author-X-Name-Last: Kim Title: Two Kinds of Value Premiums Abstract: We examined the return co-movement of popular value-oriented investment strategies inside and outside equity. There are two distinct groups among the strategies examined in this study. The returns of strategies within a group move together, while the returns of strategies belonging to different groups do not. In addition, the two groups have very different exposures to conventional equity risk factors. We interpret one of the two groups as being related to forward bias, and the other as being related to contrarian profits. To illustrate the usefulness of this grouping, we considered two applications. In the first application, an effective way to achieve value diversification requires selecting value strategies from both groups. In the second application, an effective value timing method requires excluding one group from the analysis. Journal: International Economic Journal Pages: 281-299 Issue: 2 Volume: 26 Year: 2012 Month: 4 X-DOI: 10.1080/10168737.2012.688521 File-URL: http://hdl.handle.net/10.1080/10168737.2012.688521 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:2:p:281-299 Template-Type: ReDIF-Article 1.0 Author-Name: Rokon Bhuiyan Author-X-Name-First: Rokon Author-X-Name-Last: Bhuiyan Title: The Effects of Monetary Policy Shocks in Bangladesh: A Bayesian Structural VAR Approach Abstract: This paper develops a Bayesian structural VAR model for Bangladesh in a small-open-economy context in order to estimate the effects of monetary policy shocks on various macroeconomic variables. To increase the precision of the model identification, we allow the macroeconomic variables of the model to interact simultaneously with each other. This paper finds that the liquidity effect and the exchange-rate effect of the monetary policy shock are realized immediately, while industrial production responds with a lag of over half a year, and the inflation rate responds with a lag of more than one year. I also find that monetary policy shocks are not the dominant source of industrial production fluctuations in Bangladesh. Journal: International Economic Journal Pages: 301-316 Issue: 2 Volume: 26 Year: 2012 Month: 6 X-DOI: 10.1080/10168737.2011.552514 File-URL: http://hdl.handle.net/10.1080/10168737.2011.552514 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:2:p:301-316 Template-Type: ReDIF-Article 1.0 Author-Name: Birgit Bednar-Friedl Author-X-Name-First: Birgit Author-X-Name-Last: Bednar-Friedl Author-Name: Karl Farmer Author-X-Name-First: Karl Author-X-Name-Last: Farmer Title: Public Debt, Terms of Trade and Welfare: The Role of Capital Production Shares, External Balances, and Dynamic (In)efficiency Abstract: In view of still large external imbalances across the world economy and dramatically risen public debts in major advanced economies, this paper reconsiders the relationship between public debt, the terms of trade and welfare in a two-good, two-country overlapping generations model with technological differences across countries. We find that the terms of trade effect of a public debt shock depends only on international differences in capital production shares and the dynamic (in)efficiency of the world economy. As in a model with similar capital production shares, domestic welfare rises and foreign welfare decreases when Home has a positive external balance and the Golden Rule holds. Under dynamic efficiency, welfare decreases in the debt-expanding, net foreign creditor country if she has a relatively smaller capital production share, and if the welfare effect through the accumulation channel is negative. In contrast, under dynamic inefficiency she can increase her welfare by debt expansion. Journal: International Economic Journal Pages: 317-349 Issue: 2 Volume: 26 Year: 2012 Month: 10 X-DOI: 10.1080/10168737.2012.687204 File-URL: http://hdl.handle.net/10.1080/10168737.2012.687204 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:2:p:317-349 Template-Type: ReDIF-Article 1.0 Author-Name: Gerard Roland Author-X-Name-First: Gerard Author-X-Name-Last: Roland Title: North East Asia and North Korea: Introduction Journal: International Economic Journal Pages: 351-356 Issue: 3 Volume: 26 Year: 2012 Month: 9 X-DOI: 10.1080/10168737.2012.707874 File-URL: http://hdl.handle.net/10.1080/10168737.2012.707874 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:3:p:351-356 Template-Type: ReDIF-Article 1.0 Author-Name: Barry Eichengreen Author-X-Name-First: Barry Author-X-Name-Last: Eichengreen Title: Government, Business and Finance in Korean Industrial Development Abstract: This paper reassesses the roles of government, business and finance in South Korea's economic growth and development. It argues that these extra-market mechanisms were each important, in their own ways, for solving coordination problems that would have otherwise posed obstacles to industrial growth. But what were solutions in the early stages of modern economic growth proved to be impediments later, as the problems that had to be solved changed but the institutions did not. Journal: International Economic Journal Pages: 357-377 Issue: 3 Volume: 26 Year: 2012 Month: 9 X-DOI: 10.1080/10168737.2012.707871 File-URL: http://hdl.handle.net/10.1080/10168737.2012.707871 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:3:p:357-377 Template-Type: ReDIF-Article 1.0 Author-Name: Jing Ma Author-X-Name-First: Jing Author-X-Name-Last: Ma Author-Name: Lihui Tian Author-X-Name-First: Lihui Author-X-Name-Last: Tian Title: Global Financial Crisis and China's Transition: Balancing Market Power with Active Role of the Government Abstract: China's transition is uncompleted in terms of privatization and of government intervention into economic activities. However, China performed relatively well in handling the 1997 Asia Financial Crisis and the 2008 American Financial Storm, as it keeps a strong government on both macro-economic management and corporate activities. This paper provides some evidence from China to support the theories of developmentalists on the active role of governments in economic development and market failures. We argue that the success of transition requires a balance of market power and government regulations. Journal: International Economic Journal Pages: 379-389 Issue: 3 Volume: 26 Year: 2012 Month: 9 X-DOI: 10.1080/10168737.2012.707877 File-URL: http://hdl.handle.net/10.1080/10168737.2012.707877 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:3:p:379-389 Template-Type: ReDIF-Article 1.0 Author-Name: Annette M. Kim Author-X-Name-First: Annette M. Author-X-Name-Last: Kim Title: Seeds of Reform: Lessons from Vietnam about Informality and Institutional Change Abstract: Ordinary North Korean citizens have been coping with economic hardship by eking out livelihoods for themselves. Grassroots markets and local petty economies have become commonplace. A point of conjecture amongst scholars and policymakers is whether these developments may be the start of significant economic system change towards a market economy. This article reviews lessons learned from the transition economies about the informal and social processes required to effectively realize major economic transitions in order to discuss the preliminary evidence we have about North Korea's current informal civilian economic activity. Applying a social cognition theory of institutional change focuses our attention onto the discretionary behavior of local government, the social structure and networks that form firms and exemplars, and the social trust needed to move to new economic paradigms. It also discusses what the operations of hwa-gyo entrepreneurs, ethnic Chinese living in North Korea, pose to the existing state of the literature. Journal: International Economic Journal Pages: 391-406 Issue: 3 Volume: 26 Year: 2012 Month: 9 X-DOI: 10.1080/10168737.2012.707870 File-URL: http://hdl.handle.net/10.1080/10168737.2012.707870 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:3:p:391-406 Template-Type: ReDIF-Article 1.0 Author-Name: Stephan Haggard Author-X-Name-First: Stephan Author-X-Name-Last: Haggard Author-Name: Marcus Noland Author-X-Name-First: Marcus Author-X-Name-Last: Noland Title: The Microeconomics of North--South Korean Cross-border Integration Abstract: Economic integration between North and South Korea occurs through three modalities: traditional arm's-length trade and investment, processing on commission (POC) trade, and operations within the Kaesong Industrial Complex (KIC). In order, these three modalities are characterized by decreasing exposure of South Korean firms to North Korean policy and infrastructure. Through a survey of 200 South Korean firms operating in North Korea we find that these modalities of exchange matter greatly in terms of implied risk. For example, firms operating in the KIC are able to transact on significantly looser financial terms than those outside it. We find that direct and indirect South Korean public policy interventions influence these different modalities of exchange and thus impact entry, profitability, and sustainability of South Korean business activities in the North. In effect, the South Korean government has substituted relatively strong South Korean institutions for the relatively weak Northern ones in the KIC, thus socializing risk. As a result, the level and type of cross-border integration observed in the survey is very much a product of South Korean public policy. Journal: International Economic Journal Pages: 407-430 Issue: 3 Volume: 26 Year: 2012 Month: 9 X-DOI: 10.1080/10168737.2012.707872 File-URL: http://hdl.handle.net/10.1080/10168737.2012.707872 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:3:p:407-430 Template-Type: ReDIF-Article 1.0 Author-Name: Jehoon Park Author-X-Name-First: Jehoon Author-X-Name-Last: Park Title: Reunification of the Korean Peninsula from the Context of Northeast Asian Regional Integration Abstract: We have to manage North Korea, a special country of old regime and young leader. Therefore we need patience, a balanced perspective between the pessimistic and the optimistic, and a comprehensive approach combining integration and unification. We should admit that regional integration and unification will take a long time. But they could come true earlier than we expect if we are successful in deriving and implementing a master plan combining the Northeast Asian version of a regional integration model and a system change model based on the strategy of unification through regional integration. Journal: International Economic Journal Pages: 431-446 Issue: 3 Volume: 26 Year: 2012 Month: 9 X-DOI: 10.1080/10168737.2012.707873 File-URL: http://hdl.handle.net/10.1080/10168737.2012.707873 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:3:p:431-446 Template-Type: ReDIF-Article 1.0 Author-Name: Sung Min Mun Author-X-Name-First: Sung Min Author-X-Name-Last: Mun Author-Name: Byoung Hark Yoo Author-X-Name-First: Byoung Hark Author-X-Name-Last: Yoo Title: The Effects of Inter-Korean Integration Type on Economic Performance: The Role of Wage Policy Abstract: This paper analyses the effects of various possible types of inter-Korean integration on economic performance in the northern part of Korea after reunification, focusing on the role of wage policy. The wage policy of reunified Germany is generally said to have been one of the major reasons for the increase in unification costs there, because it led to East German worker wages in excess of their productivity level. To reduce the costs of unification, Korea therefore needs to apply wage policies different from reunified Germany's and from South Korea's, which requires a new type of integration. Against this backdrop, this paper classifies the integration types into three -- a unitary state, a federation, and an SAR (Special Administrative Region) -- and analyzes their relative economic effects under the assumption that each type is accompanied by different wage policies. According to this analysis, the federation type shows unemployment and growth patterns similar to those observed in East Germany, the unitary state type higher unemployment and lower growth than in East Germany, and the SAR type lower unemployment and higher growth. Journal: International Economic Journal Pages: 447-470 Issue: 3 Volume: 26 Year: 2012 Month: 9 X-DOI: 10.1080/10168737.2012.707869 File-URL: http://hdl.handle.net/10.1080/10168737.2012.707869 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:3:p:447-470 Template-Type: ReDIF-Article 1.0 Author-Name: Max St. Brown Author-X-Name-First: Max Author-X-Name-Last: St. Brown Author-Name: Seung Mo Choi Author-X-Name-First: Seung Mo Author-X-Name-Last: Choi Author-Name: Hyung Seok Kim Author-X-Name-First: Hyung Seok Author-X-Name-Last: Kim Title: Korean Economic Integration: Prospects and Pitfalls Abstract: Using a growth model of productivity catch-up estimated from the 1990 German reunification, we study the economic impacts of a hypothetical economic integration between South Korea and North Korea on macro aggregates. By considering a range of scenarios, we analyze the impacts of labor migration and capital transfer policies. Journal: International Economic Journal Pages: 471-485 Issue: 3 Volume: 26 Year: 2012 Month: 9 X-DOI: 10.1080/10168737.2012.707875 File-URL: http://hdl.handle.net/10.1080/10168737.2012.707875 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:3:p:471-485 Template-Type: ReDIF-Article 1.0 Author-Name: Paul Hare Author-X-Name-First: Paul Author-X-Name-Last: Hare Title: North Korea: Building the Institutions to Raise Living Standards Abstract: This paper examines the nature of the economic failure that has brought North Korea such low living standards, and considers how the economic system might be reformed to facilitate a return to overall growth in both aggregate income (GDP) and general living standards. The focus is on institutional aspects of the needed reforms, emphasising the importance of building on existing institutions and practices wherever possible, rather than starting from scratch from a tabula rasa. Food supplies, the large military establishment, and the astonishing failure to adapt to the trade shock resulting from the collapse of the USSR are reviewed in detail, and potential lessons are explored from EU enlargement, German reunification and the very messy Russian transition. In proposing reforms, the paper is pragmatic and flexible, prioritising measures to improve food supplies while also emphasising a wide range of local, experimental and decentralised reforms that surely have greater chance of success than a top-down approach. Journal: International Economic Journal Pages: 487-509 Issue: 3 Volume: 26 Year: 2012 Month: 9 X-DOI: 10.1080/10168737.2012.707876 File-URL: http://hdl.handle.net/10.1080/10168737.2012.707876 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:3:p:487-509 Template-Type: ReDIF-Article 1.0 Author-Name: Byung-Yeon Kim Author-X-Name-First: Byung-Yeon Author-X-Name-Last: Kim Author-Name: Gerard Roland Author-X-Name-First: Gerard Author-X-Name-Last: Roland Title: Scenarios for a Transition to a Prosperous Market Economy in North Korea Abstract: We examine in detail two possible scenarios for a transition to the market economy in North Korea. In the first scenario, we explore a transition path of North Korea to the market economy following a regime collapse. In the second scenario, we explore a transition path that would be chosen by the North Korean leaders, following the experience of China and Vietnam. While these scenarios have common features, they also involve important differences. Journal: International Economic Journal Pages: 511-539 Issue: 3 Volume: 26 Year: 2012 Month: 9 X-DOI: 10.1080/10168737.2012.707878 File-URL: http://hdl.handle.net/10.1080/10168737.2012.707878 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:3:p:511-539 Template-Type: ReDIF-Article 1.0 Author-Name: Victoria Miller Author-X-Name-First: Victoria Author-X-Name-Last: Miller Title: How a Bank Bailout may Increase Systemic Risk Abstract: In 2008--2009, the US government spent trillions of dollars to bailout its financial system and prevent insolvency due to a deterioration in domestic loan portfolios. The following dips in US bond prices suggest that global investors feared that the US was over-extending itself and might be unable to repay its debt with taxes rather than inflation. The paper illustrates that if uncertainty arises about a large government's ability to raise taxes to repay its debt, then a debt-financed bailout which initially restores bank health may inadvertently contribute to the financial system's ultimate demise if banks are important lenders to a foreign country that pegs its currency to the domestic money. Journal: International Economic Journal Pages: 541-546 Issue: 4 Volume: 26 Year: 2012 Month: 6 X-DOI: 10.1080/10168737.2011.616521 File-URL: http://hdl.handle.net/10.1080/10168737.2011.616521 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:4:p:541-546 Template-Type: ReDIF-Article 1.0 Author-Name: Juha Tervala Author-X-Name-First: Juha Author-X-Name-Last: Tervala Title: Money Supply Rules and Exchange Rate Dynamics Abstract: This paper examines the implications of monetary policy rules for exchange rate dynamics. I extend a standard New Open Economy Macroeconomics model with the introduction of a simple money supply rule, whereby central banks change their monetary policy if output diverges from potential output or if inflation diverges from the target inflation. A key result is that, in the case of permanent technology and monetary shocks, the nominal exchange rate does not follow a random walk; instead, the exchange rate undershoots its long-run value. An undershooting of the exchange rate derives from the active monetary policy that both countries conduct. Journal: International Economic Journal Pages: 547-565 Issue: 4 Volume: 26 Year: 2012 Month: 1 X-DOI: 10.1080/10168737.2011.558517 File-URL: http://hdl.handle.net/10.1080/10168737.2011.558517 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:4:p:547-565 Template-Type: ReDIF-Article 1.0 Author-Name: Meixing Dai Author-X-Name-First: Meixing Author-X-Name-Last: Dai Title: External Constraint and Financial Crises with Balance Sheet Effects Abstract: This article investigates the dynamic implications of Krugman's (1999) model of financial crises with balance-sheet effects, which has a considerable impact on the literature of international financial crisis. Considering explicitly the wealth-accumulation constraint and the external equilibrium condition, I describe an emerging-market financial crisis as a jump from an unstable dynamic trajectory to a stable one, instead of a jump from a ‘good’ to a ‘bad’ equilibrium with zero investment and zero foreign debt. By discriminating the financial crises according to the severity of the negative impacts of some internal and external factors, this article also adds some insights into the anti-crisis policy. Journal: International Economic Journal Pages: 567-585 Issue: 4 Volume: 26 Year: 2012 Month: 3 X-DOI: 10.1080/10168737.2011.569560 File-URL: http://hdl.handle.net/10.1080/10168737.2011.569560 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:4:p:567-585 Template-Type: ReDIF-Article 1.0 Author-Name: Arvin Pirness Author-X-Name-First: Arvin Author-X-Name-Last: Pirness Author-Name: M. Rose Olfert Author-X-Name-First: M. Rose Author-X-Name-Last: Olfert Author-Name: Mark D. Partridge Author-X-Name-First: Mark D. Author-X-Name-Last: Partridge Author-Name: William Hartley Furtan Author-X-Name-First: William Hartley Author-X-Name-Last: Furtan Title: Assessing the Impact of State Trading Enterprises Abstract: State Trading Enterprises (STEs) are periodically subject to intense scrutiny for their suspected negative impact on the international trade of agricultural goods. Sound empirical assessment of the impact of STEs is scant, in spite of the ongoing and intense debate over their impacts, especially in the context of reform at the WTO. In this paper we use the case of world wheat trade between 2212 country pairs over a 35 year span to assess STE impacts. Using a gravity model, we estimate a Poisson pseudo maximum likelihood fixed effects model of world wheat trade to assess the role of both the presence of STEs and STEs with monopoly power. Further addressing estimation challenges, we also estimate zero-inflated versions of Poisson and Negative Binomial Regression models. We find consistent support for the hypothesis that monopoly export STEs are associated with higher exports for their host country. Similarly, import STEs appear to inhibit wheat imports, suggesting a protectionist function. Journal: International Economic Journal Pages: 587-608 Issue: 4 Volume: 26 Year: 2012 Month: 4 X-DOI: 10.1080/10168737.2011.578145 File-URL: http://hdl.handle.net/10.1080/10168737.2011.578145 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:4:p:587-608 Template-Type: ReDIF-Article 1.0 Author-Name: Adugna Lemi Author-X-Name-First: Adugna Author-X-Name-Last: Lemi Title: Trade Liberalization and Change in Poverty Status in Rural Ethiopia: What are the Links? Abstract: The impacts of trade liberalization on poverty status of farm households in Africa often come through its effects on prices, government revenues, and employment, among other things. For the case of Ethiopia, the main channel through which trade liberalization affects farm households is changes in the prices of inputs and outputs. The aim of this study is to empirically examine the impacts of trade reform on poverty status in rural Ethiopia. The results show that, although households’ resource endowment had consistent and significant improvement impacts, trade liberalization had mixed effects on change in poverty status. As a result of trade liberalization, contrary to expectation, changes in the prices of cash crops (i.e. chat and coffee) had increased the probability of remaining poor and falling into poverty. On the other hand, changes in the relative prices of staple food crops (i.e. teff and wheat), together with access to credit and schools, had increased the probability of escaping poverty and remaining above the poverty line. Journal: International Economic Journal Pages: 609-633 Issue: 4 Volume: 26 Year: 2012 Month: 8 X-DOI: 10.1080/10168737.2011.616520 File-URL: http://hdl.handle.net/10.1080/10168737.2011.616520 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:4:p:609-633 Template-Type: ReDIF-Article 1.0 Author-Name: Nikolaos Antonakakis Author-X-Name-First: Nikolaos Author-X-Name-Last: Antonakakis Author-Name: Harald Badinger Author-X-Name-First: Harald Author-X-Name-Last: Badinger Title: International Spillovers of Output Growth and Output Growth Volatility: Evidence from the G7 Abstract: This paper examines the transmission of GDP growth and GDP growth volatility among the G7 countries over the period 1960Q1 -- 2010Q4, using a multivariate GARCH model and volatility impulse response functions (VIRFs) to identify the source, magnitude and the duration of volatility spillovers. Results indicate the presence of positive own-country GDP growth spillovers in each country and cross-country GDP growth spillovers among most of the G7 countries. In addition, the large number of significant own-country output growth volatility spillovers and cross-country output growth volatility spillovers indicates that output growth shocks in most of the G7 countries affect output growth volatility in the other remaining countries. An additional finding is that the duration of output growth volatility spillovers has increased over time from some seven quarters in the 1970s to some ten quarters during the recent crisis, which is likely to be due to the increased integration of goods and financial markets. Journal: International Economic Journal Pages: 635-653 Issue: 4 Volume: 26 Year: 2012 Month: 8 X-DOI: 10.1080/10168737.2011.631025 File-URL: http://hdl.handle.net/10.1080/10168737.2011.631025 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:4:p:635-653 Template-Type: ReDIF-Article 1.0 Author-Name: Jos� Eduardo Gómez-González Author-X-Name-First: Jos� Eduardo Author-X-Name-Last: Gómez-González Title: Failing and Merging as Competing Alternatives during Times of Financial Distress: Evidence from the Colombian Financial Crisis Abstract: This paper studies the determinants of individual bank failures and M&A processes in Colombia during the financial crisis of the late 1990s. Using bank-specific data we estimate competing risk hazards models and find that while profitability and capitalization are the most important determinants of the probability of failing, a bank's size, efficiency and capitalization are the main determinants of the probability of participating in an integration process. All else constant, an increase in capitalization reduces the probability of disappearing, whether due to the occurrence of bankruptcy, a merge or an acquisition. However, a marginal increase in capitalization reduces the probability of bankruptcy significantly more than the probability of integration. This study is the first to present a competing risks hazard model to identify covariates that excerpt significant influence on the probability of failing or merging for banks of an emerging economy. Journal: International Economic Journal Pages: 655-671 Issue: 4 Volume: 26 Year: 2012 Month: 10 X-DOI: 10.1080/10168737.2011.632023 File-URL: http://hdl.handle.net/10.1080/10168737.2011.632023 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:4:p:655-671 Template-Type: ReDIF-Article 1.0 Author-Name: Ichiro Iwasaki Author-X-Name-First: Ichiro Author-X-Name-Last: Iwasaki Author-Name: P�ter Csizmadia Author-X-Name-First: P�ter Author-X-Name-Last: Csizmadia Author-Name: Miklós Ill�ssy Author-X-Name-First: Miklós Author-X-Name-Last: Ill�ssy Author-Name: Csaba Makó Author-X-Name-First: Csaba Author-X-Name-Last: Makó Author-Name: Miklós Szanyi Author-X-Name-First: Miklós Author-X-Name-Last: Szanyi Title: The Nested Variable Model of FDI Spillover Effects: Estimation Using Hungarian Panel Data Abstract: A new empirical model is presented that considers the productivity spillover effects of foreign direct investment (FDI) by focusing on the multi-layered structure of industrial classifications. In this model, the market presence of horizontal FDI in a host country is expressed using multiple spillover variables with a nested structure corresponding to the aggregated level of industrial classification. Using large-scale firm-level data from Hungary, we estimated the nested variable model and verified horizontal FDI spillover effects that cannot be captured with the conventional model having a single horizontal variable. Journal: International Economic Journal Pages: 673-709 Issue: 4 Volume: 26 Year: 2012 Month: 10 X-DOI: 10.1080/10168737.2012.719914 File-URL: http://hdl.handle.net/10.1080/10168737.2012.719914 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:4:p:673-709 Template-Type: ReDIF-Article 1.0 Author-Name: Jude Eggoh Author-X-Name-First: Jude Author-X-Name-Last: Eggoh Title: Inflation Effects on Finance-Growth Link: A Panel Smooth Threshold Approach Abstract: This paper proposes an original framework to examine whether the strength of the relationship between financial development and economic growth, widely documented in the recent empirical literature, varies with the inflation rate. Using a Panel Smooth Threshold Regression for 71 developed and developing countries over the period 1960--2004, we find a non-linear link between financial development and economic growth: three equilibriums are identified with inflation rate. Then, there is an inflation threshold, for which finance ceases to increase economic growth. Our results suggest that for an inflation rate higher than 20%, economic growth is not, or is negatively, affected by financial development, whereas the impact of finance on growth is positive and significant for an inflation level below 10%. Journal: International Economic Journal Pages: 711-725 Issue: 4 Volume: 26 Year: 2012 Month: 6 X-DOI: 10.1080/10168737.2011.631024 File-URL: http://hdl.handle.net/10.1080/10168737.2011.631024 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:4:p:711-725 Template-Type: ReDIF-Article 1.0 Author-Name: Jaymin Lee Author-X-Name-First: Jaymin Author-X-Name-Last: Lee Title: Labor Unions and Firm Profitability under Different Political and Economic Environments: Evidence from Korea Abstract: This paper analyzes the effect of unions on the profitability of firms under different political and economic environments in Korea. During the authoritarian period (1981--1986), unions lowered firm profitability despite the repression by the state, due to the strong protection of individual workers and the weak discipline in the financial market. During the democratization period (1988--1996), unions lowered firm profitability, but only marginally more than they did during the authoritarian period. In the post-crisis period (1999--2007), unions did not lower firm profitability any longer given the relatively weak protection of individual workers and the stronger discipline in the financial market. Journal: International Economic Journal Pages: 727-747 Issue: 4 Volume: 26 Year: 2012 Month: 9 X-DOI: 10.1080/10168737.2012.734044 File-URL: http://hdl.handle.net/10.1080/10168737.2012.734044 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:26:y:2012:i:4:p:727-747 Template-Type: ReDIF-Article 1.0 Author-Name: Hakan Yilmazkuday Author-X-Name-First: Hakan Author-X-Name-Last: Yilmazkuday Title: Inflation Thresholds and Growth Abstract: This paper investigates inflation thresholds that lead to higher growth rates using five-year averages of standard variables for 84 countries from 1965 to 2004. The historical experience has important policy implications for developing countries: (i) the catch-up effect has worked only when inflation is below 12%; (ii) the positive effect of human capital on growth has been present and significant when inflation has been below 15%; (iii) financial development has been effective only when inflation has been below 10%; (iv) government size has negatively affected growth when inflation has been below 10%; (v) trade has positively affected growth when inflation has been below 8%. Journal: International Economic Journal Pages: 1-10 Issue: 1 Volume: 27 Year: 2013 Month: 3 X-DOI: 10.1080/10168737.2012.658831 File-URL: http://hdl.handle.net/10.1080/10168737.2012.658831 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:1:p:1-10 Template-Type: ReDIF-Article 1.0 Author-Name: Hiroyuki Nishiyama Author-X-Name-First: Hiroyuki Author-X-Name-Last: Nishiyama Author-Name: Yasuhiro Gintani Author-X-Name-First: Yasuhiro Author-X-Name-Last: Gintani Title: The Effects of Globalization on the Elasticity of Labor Demand and Employment Abstract: This paper examines the effect of globalization accelerated by an expansion in trade and foreign direct investment (FDI) on the national labor demand under an open economy with underemployment. We find that the higher the elasticity of substitution, the flatter the tangent slope of the labor demand curve under a trade economy (without FDI). If the wage level at home is much higher than that in a foreign country, an increase in the elasticity of substitution decreases domestic employment. The beginning of FDI with international production relocation makes the tangent slope of the home labor demand curve flatter than that under a trade economy. If the home wage falls within the high (low) range, FDI decreases (increases) home employment. This result implies that, in agreement with the conventional wisdom, FDI does not necessarily lead to the hollowing out of employment in a high-wage country. Journal: International Economic Journal Pages: 11-23 Issue: 1 Volume: 27 Year: 2013 Month: 3 X-DOI: 10.1080/10168737.2012.719917 File-URL: http://hdl.handle.net/10.1080/10168737.2012.719917 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:1:p:11-23 Template-Type: ReDIF-Article 1.0 Author-Name: Victor Pontines Author-X-Name-First: Victor Author-X-Name-Last: Pontines Title: Inflation Targeting and Exchange Rate Volatility: A Treatment Effect Regression Approach Abstract: This study empirically examines the issue of whether countries that target inflation systematically experience higher exchange rate volatility. A major challenge that immediately confronts such analysis is that countries do not choose their monetary regimes in a random fashion. In this paper, an attempt is made to take into account the problem of self-selection in the countries’ decision to target inflation via a treatment effect regression that estimates jointly the probability of being an inflation targeter and the outcome equation. The analysis indicates that nominal and real effective exchange rate volatility are both lower in inflation-targeting countries than countries that do not target inflation. More importantly, the analysis also suggest that developing countries that target inflation have lower nominal and real effective exchange rate volatility than non-inflation-targeting developing countries; in the case, however, of inflation-targeting industrial countries, it is found to be higher. Journal: International Economic Journal Pages: 25-39 Issue: 1 Volume: 27 Year: 2013 Month: 3 X-DOI: 10.1080/10168737.2012.719913 File-URL: http://hdl.handle.net/10.1080/10168737.2012.719913 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:1:p:25-39 Template-Type: ReDIF-Article 1.0 Author-Name: Peter A.G. van Bergeijk Author-X-Name-First: Peter A.G. Author-X-Name-Last: van Bergeijk Title: The World Trade Collapse and International Value Chains: A Cross-Country Perspective Abstract: This paper challenges the mainstream narrative that links the strength and speed of the world trade collapse in 2008--2009 to the international fragmentation of production, organized in international value chains. The paper points out often overlooked counteracting forces such as non-bank-intermediated credit, trust in long-term commercial affairs and intra-firm relationships. A cross-section of the strength and speed of the import decline in 42 countries shows that both the share of manufacturing trade and an indicator for the vertical specialization in trade are associated with less contraction and slower adjustment. Countries with large shares of manufactures in trade (a proxy for international value chain activity) and/or vertical specialization in trade did not reduce their trade more strongly. The empirical evidence points out that international value chains may very well have had a major dampening effect that reduced the extent to which world trade fell. Journal: International Economic Journal Pages: 41-53 Issue: 1 Volume: 27 Year: 2013 Month: 3 X-DOI: 10.1080/10168737.2012.658833 File-URL: http://hdl.handle.net/10.1080/10168737.2012.658833 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:1:p:41-53 Template-Type: ReDIF-Article 1.0 Author-Name: Dorothee Boccanfuso Author-X-Name-First: Dorothee Author-X-Name-Last: Boccanfuso Author-Name: Luc Savard Author-X-Name-First: Luc Author-X-Name-Last: Savard Author-Name: Bernice Elvire Savy Author-X-Name-First: Bernice Elvire Author-X-Name-Last: Savy Title: Human Capital and Growth: New Evidences from African Data Abstract: Economic theory has long acknowledged a positive relation between human capital and economic growth (Smith, 1776; Becker, 1964), which was nevertheless called into question in the late 1990s (Caselli et al., 1996; Pritchett, 2001). The two primary criticisms evoked were the failure to consider diminishing returns to education and qualitative aspects of the stock of human capital. This work aims to redress inadequacies in the literature related to the usual proxy of human capital by advancing a composite indicator of human capital (PCA). This indicator allows for an integration of the qualitative aspects in question and uses the indicator of the stock of human capital (Mincer, 1974) to take diminishing returns into consideration. Adopting the methodology developed by Islam (1995) allows for the impact of human capital to become positive once again in the process of economic growth. The data also reveal a conditional convergence process for the 22 African countries considered over the period 1970 to 2000. Journal: International Economic Journal Pages: 55-77 Issue: 1 Volume: 27 Year: 2013 Month: 3 X-DOI: 10.1080/10168737.2012.659276 File-URL: http://hdl.handle.net/10.1080/10168737.2012.659276 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:1:p:55-77 Template-Type: ReDIF-Article 1.0 Author-Name: Jan König Author-X-Name-First: Jan Author-X-Name-Last: König Author-Name: Erkki Koskela Author-X-Name-First: Erkki Author-X-Name-Last: Koskela Title: Can Committed Profit Sharing Lower Flexible Outsourcing? Abstract: We analyze the impact of committed profit sharing for low-skilled workers on the amount of international outsourcing, if there is a bargaining between a firm and a labor union. In this bargaining round, the parties negotiate over the wage and provided effort. Here, we find that effort is independent of the bargaining power, profit sharing and wage. We further find that, in general, profit sharing leads to a substitution effect, which results in a decreased low-skilled wage and can therefore be an instrument to lower the demanded amount of outsourcing. For the optimal profit share, we find that it depends on the bargaining power of the union. The firm desists from such a remuneration scheme if the union is too strong. In contrast, if the firm is strong enough, the implementation becomes beneficial. Journal: International Economic Journal Pages: 79-95 Issue: 1 Volume: 27 Year: 2013 Month: 3 X-DOI: 10.1080/10168737.2012.658832 File-URL: http://hdl.handle.net/10.1080/10168737.2012.658832 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:1:p:79-95 Template-Type: ReDIF-Article 1.0 Author-Name: Florian Baumann Author-X-Name-First: Florian Author-X-Name-Last: Baumann Author-Name: Tim Friehe Author-X-Name-First: Tim Author-X-Name-Last: Friehe Title: Profit Shifting Despite Symmetric Tax Rates? A Note on the Role of Tax Enforcement Abstract: This paper analyzes a multinational corporation that may use tax evasion and profit shifting as a means to minimize tax liabilities. Our main finding is that profit shifting may occur even when tax rates are the same across countries. This will be the case whenever there is a tax differential in effective tax rates resulting from differences in tax enforcement. In this context, profit shifting occurs to enable tax evasion in a country where tax enforcement is less harsh. Moreover, for a given differential in tax rates, differences in tax enforcement may either accentuate or dampen profit shifting. Importantly, the predictions regarding the direction of profit shifting that would result in our set-up may contrast sharply with those of the preceding literature. Journal: International Economic Journal Pages: 97-108 Issue: 1 Volume: 27 Year: 2013 Month: 3 X-DOI: 10.1080/10168737.2012.668920 File-URL: http://hdl.handle.net/10.1080/10168737.2012.668920 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:1:p:97-108 Template-Type: ReDIF-Article 1.0 Author-Name: Eleni A. Kaditi Author-X-Name-First: Eleni A. Author-X-Name-Last: Kaditi Title: Foreign Investments and Institutional Convergence in South-eastern Europe Abstract: Foreign investments are in the focus of most governments around the world. In order to be able to set a policy agenda that is successful in promoting FDI, it is necessary to understand the determinants of foreign investments. This paper examines whether, and to what extent, sound institutions and the degree of regulation deter or attract FDI flows in four economies of south-eastern Europe. In a dynamic panel analysis, a broad set of institutional and regulatory variables that may affect the decision of foreign investors to undertake investment projects in this region is examined, using firm-level data. Analysis shows that the quality of the institutional environment significantly influences foreign capital. Governments in this region should, therefore, focus primarily on creating an effective legal system, having relatively stable political and economic conditions. Journal: International Economic Journal Pages: 109-126 Issue: 1 Volume: 27 Year: 2013 Month: 3 X-DOI: 10.1080/10168737.2012.682076 File-URL: http://hdl.handle.net/10.1080/10168737.2012.682076 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:1:p:109-126 Template-Type: ReDIF-Article 1.0 Author-Name: D. V. Pahan Prasada Author-X-Name-First: D. V. Author-X-Name-Last: Pahan Prasada Title: Domestic versus Multilateral Institutions in Bilateral Trade: A Comparative Gravity Analysis Abstract: The role of domestic and multilateral institutional variables in determining bilateral trade is estimated using recent cross-sectional data covering 192 countries. Linear estimations are conducted using lognormal and Tobit models while multiplicative models use Poisson and hurdle Poisson-logit estimators. The multiple indices of domestic institutional quality available are scaled into four categories using multidimensional scaling. Membership of trade and political organizations proxy for multilateral institutional heterogeneity. Count data models a report better model fit and conservative estimates compared with linear estimations. Domestic institutional quality has a significant but moderate association with bilateral trade while multilateral institutions have a substantially large and statistically significant association with trade. Journal: International Economic Journal Pages: 127-142 Issue: 1 Volume: 27 Year: 2013 Month: 3 X-DOI: 10.1080/10168737.2012.719919 File-URL: http://hdl.handle.net/10.1080/10168737.2012.719919 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:1:p:127-142 Template-Type: ReDIF-Article 1.0 Author-Name: Maurice Obstfeld Author-X-Name-First: Maurice Author-X-Name-Last: Obstfeld Title: Crises and the International System Abstract: This paper reviews the recent experience of financial crises since 2007, including the continuing crisis in the euro zone. I seek to answer three main questions: In what respects (if any) is the recent experience of crises novel? How special is the euro crisis? And what changes in the international financial architecture can reduce the chances of future crises? Journal: International Economic Journal Pages: 143-155 Issue: 2 Volume: 27 Year: 2013 Month: 6 X-DOI: 10.1080/10168737.2013.793901 File-URL: http://hdl.handle.net/10.1080/10168737.2013.793901 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:2:p:143-155 Template-Type: ReDIF-Article 1.0 Author-Name: Takeshi Kimura Author-X-Name-First: Takeshi Author-X-Name-Last: Kimura Title: Why Do Prices Remain Stable in the Bubble and Bust Period? Abstract: In spite of a large swing in real output growth in the bubble and bust period, aggregate prices remained relatively stable in Japan. Empirical results show that such price rigidity can be explained by the customer market model combined with financial constraints. The degree of financial constraints that firms face in the bubble and bust period fluctuates significantly, and the impact of financial positions on firms' prices is counter-cyclical. In booms, liquidity-abundant firms invest in market share by keeping prices down, while in a recession financially constrained firms charge a high price to locked-in customers who remain loyal. Such counter-cyclicality is clearly observed in the pricing behavior of large firms that produce differentiated goods. In contrast, small firms whose product brand is not well established in the market cannot lock in customers, and hence financial constraints do not affect their pricing decisions. Journal: International Economic Journal Pages: 157-177 Issue: 2 Volume: 27 Year: 2013 Month: 6 X-DOI: 10.1080/10168737.2012.719918 File-URL: http://hdl.handle.net/10.1080/10168737.2012.719918 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:2:p:157-177 Template-Type: ReDIF-Article 1.0 Author-Name: Enrique G. Mendoza Author-X-Name-First: Enrique G. Author-X-Name-Last: Mendoza Author-Name: Tack Yun Author-X-Name-First: Tack Author-X-Name-Last: Yun Title: Macroeconomic and Financial Stability in Emerging-market Countries: A Symposium Journal: International Economic Journal Pages: 179-182 Issue: 2 Volume: 27 Year: 2013 Month: 6 X-DOI: 10.1080/10168737.2013.796113 File-URL: http://hdl.handle.net/10.1080/10168737.2013.796113 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:2:p:179-182 Template-Type: ReDIF-Article 1.0 Author-Name: C. Bora Durdu Author-X-Name-First: C. Bora Author-X-Name-Last: Durdu Title: Emerging Market Business Cycles: Recent Advances Abstract: Higher variability of consumption relative to output and strong countercyclicality of the trade balance are important regularities of emerging market business cycles. This paper surveys the recent advances in the literature with a goal to understanding the main drivers of these regularities. The literature suggests that trend shocks or countercyclical interest rate shocks are useful modeling tools, but these shocks need to be amplified through inherent frictions to capture these two regularities with realistic calibrations. Informational frictions in expectation formation and search-matching frictions in the labor market appear to provide powerful amplification to trend shocks and countercyclical interest rate shocks, respectively. Journal: International Economic Journal Pages: 183-199 Issue: 2 Volume: 27 Year: 2013 Month: 6 X-DOI: 10.1080/10168737.2013.796110 File-URL: http://hdl.handle.net/10.1080/10168737.2013.796110 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:2:p:183-199 Template-Type: ReDIF-Article 1.0 Author-Name: Bulent Guler Author-X-Name-First: Bulent Author-X-Name-Last: Guler Author-Name: Tack Yun Author-X-Name-First: Tack Author-X-Name-Last: Yun Title: Euler Equation Approach for Emerging-market Macro Models Abstract: This paper focuses on how to obtain numerical solutions to emerging-market DSGE models with occasionally binding constraints by using the Euler equation, rather than using value functions of households. The main point is that the Euler-equation approach works in a fast and simple way for a variety of recent emerging-market macro models. An important reason behind this point is that it is relatively easy to pin down the functional form of aggregate equilibrium conditions in these models. The time-iteration method is applied to Euler equations of a small open-economy with overborrowings. It is discussed how to use the Euler equation approach to recent models of sovereign debt and to show that the presence of the Laffer-curve of debt-revenues leads us to use the piecewise parameterized-expectations approach. Journal: International Economic Journal Pages: 201-215 Issue: 2 Volume: 27 Year: 2013 Month: 6 X-DOI: 10.1080/10168737.2013.796111 File-URL: http://hdl.handle.net/10.1080/10168737.2013.796111 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:2:p:201-215 Template-Type: ReDIF-Article 1.0 Author-Name: Juan Carlos Hatchondo Author-X-Name-First: Juan Carlos Author-X-Name-Last: Hatchondo Author-Name: Leonardo Martinez Author-X-Name-First: Leonardo Author-X-Name-Last: Martinez Title: Sudden Stops, Time Inconsistency, and the Duration of Sovereign Debt Abstract: We study the sovereign debt duration chosen by the government in the context of a standard model of sovereign default. The government balances off increasing the duration of its debt to mitigate rollover risk and lowering duration to mitigate the debt dilution problem. We present two main results. First, when the government decides the debt duration on a sequential basis, sudden stop risk increases the average duration by 1 year. Second, we illustrate the time inconsistency problem in the choice of sovereign debt duration: governments would like to commit to a duration that is 1.7 years shorter than the one they choose when decisions are made sequentially. Journal: International Economic Journal Pages: 217-228 Issue: 2 Volume: 27 Year: 2013 Month: 6 X-DOI: 10.1080/10168737.2013.796112 File-URL: http://hdl.handle.net/10.1080/10168737.2013.796112 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:2:p:217-228 Template-Type: ReDIF-Article 1.0 Author-Name: Yongseung Jung Author-X-Name-First: Yongseung Author-X-Name-Last: Jung Author-Name: Doo Yong Yang Author-X-Name-First: Doo Yong Author-X-Name-Last: Yang Title: Business Cycles in an Emerging Economy with Financial Frictions: The Case of Korea Abstract: This paper investigates sources of business cycles in Korea to shed some lights on the effects of economic crisis and the role of financial frictions. For this purpose, it sets up a canonical international real business cycle model augmented by international financial market frictions as in Garcia-Cicco, Pancrazi, and Uribe (2010). The paper applies Watson's (1993) measure of fit to evaluate the role of financial market frictions over Korean business cycles. It finds that the financial frictions have played a limited role in the economic fluctuations in Korea before and after the 1997 financial crisis. Journal: International Economic Journal Pages: 229-247 Issue: 2 Volume: 27 Year: 2013 Month: 6 X-DOI: 10.1080/10168737.2013.796114 File-URL: http://hdl.handle.net/10.1080/10168737.2013.796114 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:2:p:229-247 Template-Type: ReDIF-Article 1.0 Author-Name: Sunyoung Park Author-X-Name-First: Sunyoung Author-X-Name-Last: Park Title: The Design of Subprime Mortgage-backed Securities and Information Insensitivity Abstract: What is the securitization process for? What exactly happened in the subprime mortgage-backed securities (MBSs) market from the housing boom to the global financial crisis? To answer these questions, I use a novel hand-collected dataset of subprime MBSs issued between 2004 and 2007, which includes a detailed description of underlying mortgage characteristics and deal structures. This paper studies the purpose of the securitization process in the context of the subprime MBS market as a trigger of the global financial crisis. I find that the credit enhancements reflect the credit risks of underlying collaterals, thus ex-ante qualities of AAA subprime MBS tranches had not been deteriorated. In addition, the AAA tranche spreads are mostly explained by the bond market conditions and uncorrelated with the credit risk of collateral. This results suggest that market participants designed and priced the subprime MBSs in the way that the AAA tranche could be information insensitive. In other words, the securitization process makes it possible that market participants have less incentive to learn about the underlying collateral information. Journal: International Economic Journal Pages: 249-284 Issue: 2 Volume: 27 Year: 2013 Month: 6 X-DOI: 10.1080/10168737.2013.796115 File-URL: http://hdl.handle.net/10.1080/10168737.2013.796115 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:2:p:249-284 Template-Type: ReDIF-Article 1.0 Author-Name: Tack Yun Author-X-Name-First: Tack Author-X-Name-Last: Yun Title: Recent Issues in Emerging-economies Macroeconomics Abstract: In this paper, we summarize the recent advancement of emerging-economies macroeconomics. We begin with stylized facts and models of real business-cycles (RBCs) for emerging-market countries and then move onto the discussion of various issues associated with overborrowings and sovereign debts. The common feature of these models is that their analysis is mainly focused on the framework of RBC models for small open economies combined with financial frictions. We also discuss nominal features of emerging economies that are associated with the behavior of nominal exchange rate and foreign reserves observed during the recent global financial crisis, as well as the practice and impact of conventional and unconventional monetary policy measures. We also present some extensions of existing emerging-economies models that allow for the significant role of conventional monetary and fiscal policies. Our results can be summarized as follows. First, the canonical specification of recent models with pecuniary externalities is modified to allow for channels through which conventional monetary and fiscal policies can affect the degree of pecuniary externalities. Second, we attempt to explain the behavior of nominal exchange rate 'going up elevators and coming down stairs' shown in emerging economies during periods of zero lower bounds on the short-term nominal interest rate. Third, we modify a prototypical model of sovereign debt to show the negative correlation between the maturity of foreign debt and the accumulation of foreign reserves when the level of foreign debt is substantially high. Journal: International Economic Journal Pages: 285-302 Issue: 2 Volume: 27 Year: 2013 Month: 6 X-DOI: 10.1080/10168737.2013.796116 File-URL: http://hdl.handle.net/10.1080/10168737.2013.796116 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:2:p:285-302 Template-Type: ReDIF-Article 1.0 Author-Name: Robert Dekle Author-X-Name-First: Robert Author-X-Name-Last: Dekle Author-Name: Murat Ungor Author-X-Name-First: Murat Author-X-Name-Last: Ungor Title: The Real Exchange Rate and the Structural Transformation(s) of China and the U.S. Abstract: From 1989 to 2010, the RMB--dollar real exchange rate depreciated, despite China's rapid income growth relative to the US. We develop a macroeconomic-trade model of the very long-run equilibrium RMB-dollar real exchange rate. We show that this long-run depreciation of the RMB-dollar real exchange rate can be justified by our model, if we note that Chinese agriculture has relatively low productivity and that agriculture is tradeable. Relative to our equilibrium benchmark, the current real RMB-dollar rate is, if anything, over appreciated. Journal: International Economic Journal Pages: 303-319 Issue: 2 Volume: 27 Year: 2013 Month: 6 X-DOI: 10.1080/10168737.2013.799900 File-URL: http://hdl.handle.net/10.1080/10168737.2013.799900 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:2:p:303-319 Template-Type: ReDIF-Article 1.0 Author-Name: Takeshi Kimura Author-X-Name-First: Takeshi Author-X-Name-Last: Kimura Title: Why Do Prices Remain Stable in the Bubble and Bust Period? Journal: International Economic Journal Pages: 320-320 Issue: 2 Volume: 27 Year: 2013 Month: 6 X-DOI: 10.1080/10168737.2012.746812 File-URL: http://hdl.handle.net/10.1080/10168737.2012.746812 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:2:p:320-320 Template-Type: ReDIF-Article 1.0 Author-Name: Arslan Razmi Author-X-Name-First: Arslan Author-X-Name-Last: Razmi Title: Bretton Woods II and the East Asian Emerging Economies: Lazarus, Phoenix, or Humpty Dumpty? Abstract: Several studies have commented on the emergence of a new international monetary system in the post-Asian crisis years. The recent international financial crisis has, however, put Bretton Woods II (or BW II) under considerable strain. This paper analyzes the sustainability of the pre-crisis order from an East Asian emerging country perspective. A simple framework incorporating real and financial sectors is constructed in order to explore possible consequences of the shocks and policy choices that these economies currently face. Stock and flow implications are analyzed. Assuming that recent events would have reinforced monetary authorities' desire to maintain an adequate cushion of reserves while preventing exchange rate volatility, we find that low international interest rates enhance the stability of such a regime. Politico-economic factors, however, render some policies more sustainable than others, increasing the likelihood of a modified BW II regime with reserve accumulation financed to a greater degree by capital account rather than current account surpluses. Journal: International Economic Journal Pages: 321-345 Issue: 3 Volume: 27 Year: 2013 Month: 9 X-DOI: 10.1080/10168737.2011.652144 File-URL: http://hdl.handle.net/10.1080/10168737.2011.652144 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:3:p:321-345 Template-Type: ReDIF-Article 1.0 Author-Name: Jim Lee Author-X-Name-First: Jim Author-X-Name-Last: Lee Title: Business Cycle Synchronization in Europe: Evidence from a Dynamic Factor Model Abstract: This paper revisits the effect of the European Economic and Monetary Union (EMU) on the extent of business cycle synchronization across its member states. A dynamic latent factor model is used to identify the 'regional' effect of the euro area on output growth and inflation dynamics across European countries. The results of variance decomposition analysis confirm that both output growth and inflation tended to be more synchronized among European countries during the run-up to the EMU, but there is no strong evidence to support the argument that the 'regional' effects prevailed after 1999. Journal: International Economic Journal Pages: 347-364 Issue: 3 Volume: 27 Year: 2013 Month: 9 X-DOI: 10.1080/10168737.2012.659278 File-URL: http://hdl.handle.net/10.1080/10168737.2012.659278 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:3:p:347-364 Template-Type: ReDIF-Article 1.0 Author-Name: Salvador Contreras Author-X-Name-First: Salvador Author-X-Name-Last: Contreras Title: The Influence of Migration on Human Capital Development Abstract: This paper develops a general equilibrium overlapping generation model of migrant and domestic households that reside in one of two countries, one rich and one poor. The model is used to analyze the impact of migration on human capital development. The model shows that migration, with remittances to non-migrant poor households, has a positive impact on non-migrant households' human capital accumulation ('brain gain'). The model shows that migration (or the option of) induces human capital investment. However, it is shown that remittances have a negative impact on the growth that migrant households enjoy in the rich country. In addition, strong links to source country reduce the educational attainment of second-generation migrant households. Journal: International Economic Journal Pages: 365-384 Issue: 3 Volume: 27 Year: 2013 Month: 9 X-DOI: 10.1080/10168737.2012.659277 File-URL: http://hdl.handle.net/10.1080/10168737.2012.659277 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:3:p:365-384 Template-Type: ReDIF-Article 1.0 Author-Name: Kai Andree Author-X-Name-First: Kai Author-X-Name-Last: Andree Title: Spatial Discrimination, Nations' Size and Transportation Costs Abstract: In this paper we develop a spatial Cournot trade model with two unequally sized countries, using the geographical interpretation of the Hotelling line. We analyse the trade and welfare effects of international trade between these two countries. The welfare analysis indicates that in this framework the large country benefits from free trade and the small country may be hurt by opening to trade. This finding is contrary to the results of Shachmurove & Spiegel (1995) as well as Tharakan & Thisse (2002), who use similar models to analyze size effects in international trade, where the small country usually gains from trade and the large country may lose. Journal: International Economic Journal Pages: 385-397 Issue: 3 Volume: 27 Year: 2013 Month: 9 X-DOI: 10.1080/10168737.2012.660181 File-URL: http://hdl.handle.net/10.1080/10168737.2012.660181 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:3:p:385-397 Template-Type: ReDIF-Article 1.0 Author-Name: Maurice Schiff Author-X-Name-First: Maurice Author-X-Name-Last: Schiff Author-Name: Yanling Wang Author-X-Name-First: Yanling Author-X-Name-Last: Wang Title: North--South Trade-related Technology Diffusion and Productivity Growth: Are Small States Different? Abstract: The economies of small developing states tend to be more fragile than those in large ones. This paper examines this issue in a dynamic context by focusing on the impact of education and North--South trade-related technology diffusion (NRD) on TFP growth in small and large states in the South. The main findings are: (i) TFP growth increases with NRD, education and the interaction between the two; (ii) the impact of NRD, education and their interaction on TFP growth in small states is over three times that for large countries; and (iii) the greater TFP growth loss in small states has two brain--drain related causes: a substantially greater sensitivity of TFP growth to the brain drain, and brain drain levels that are much higher in small than in large states. Journal: International Economic Journal Pages: 399-414 Issue: 3 Volume: 27 Year: 2013 Month: 9 X-DOI: 10.1080/10168737.2012.660180 File-URL: http://hdl.handle.net/10.1080/10168737.2012.660180 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:3:p:399-414 Template-Type: ReDIF-Article 1.0 Author-Name: Christian Pierdzioch Author-X-Name-First: Christian Author-X-Name-Last: Pierdzioch Author-Name: Renatas Kizys Author-X-Name-First: Renatas Author-X-Name-Last: Kizys Title: On the Linkages of the Stock Markets of the NAFTA Countries: Fundamentals or Speculative Bubbles? Abstract: We analyze whether the linkages between the stock markets of the NAFTA member countries (Canada, Mexico, and the United States) reflect movements in fundamentals or speculative bubbles. To this end, we estimate a state-space model to decompose the stock market indexes of the three NAFTA member countries into fundamentals and speculative bubbles. We analyze the linkages of the three stock markets by means of cointegration techniques. Evidence of cointegration linkages between fundamentals is stronger than evidence of cointegration linkages between speculative bubbles. Journal: International Economic Journal Pages: 415-440 Issue: 3 Volume: 27 Year: 2013 Month: 9 X-DOI: 10.1080/10168737.2012.660182 File-URL: http://hdl.handle.net/10.1080/10168737.2012.660182 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:3:p:415-440 Template-Type: ReDIF-Article 1.0 Author-Name: Fabien Candau Author-X-Name-First: Fabien Author-X-Name-Last: Candau Title: Trade, FDI and Migration Abstract: This article provides a theoretical synthesis of the New Economic Geography to analyse the links between trade, FDI and migrations. We find that liberalizing from high trade costs, a country can attract both capital and labour -- the bifurcation pattern is a gradual peripheral exodus of workers associated with capital flight from the periphery -- but after a threshold of trade costs, opening trade generates return migration toward the periphery while capital remains agglomerated in the core. The model is built on the assumption that factors are sector specific. By relaxing this assumption and by providing a second model where workers are mobile between industries (vertically linked) but also between countries we confirm this result. Journal: International Economic Journal Pages: 441-461 Issue: 3 Volume: 27 Year: 2013 Month: 9 X-DOI: 10.1080/10168737.2012.676058 File-URL: http://hdl.handle.net/10.1080/10168737.2012.676058 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:3:p:441-461 Template-Type: ReDIF-Article 1.0 Author-Name: Edward E. Ghartey Author-X-Name-First: Edward E. Author-X-Name-Last: Ghartey Author-Name: Tom M. Amonde Author-X-Name-First: Tom M. Author-X-Name-Last: Amonde Title: Stabilization Effects of Narrative-based Monetary Policy in Jamaica Abstract: The study constructs a monetary policy indicator (MPI) from monetary policy documents and the actions of the Bank of Jamaica and Ministry of Finance and Economic Planning, and uses it to estimate four variants of an analytical narrative-vector error correction model (AN-VECM) with cointegration as the identifying restriction. In AN-VECMs 1 and 2, the cointegration is estimated in level form with respective short-term interest rate and the MPI as regressands. The first difference forms of respective models are re-estimated in AN-VECMs 3 and 4. The results are mixed, with AN-VECM 1 yielding the least results. However, in all cases, the impulse response functions indicate that the MPI yields slightly superior results in both AN-VECMs 2 and 4. A positive shock in the MPI produces price and exchange rate results which are consistent with a priori expectations from economic theory, and mixed liquidity effect and real output results. Thus, the MPI provides an important policy tool alternative for policymakers in small open economies to consider in the implementation of monetary policy. Journal: International Economic Journal Pages: 463-486 Issue: 3 Volume: 27 Year: 2013 Month: 9 X-DOI: 10.1080/10168737.2012.676059 File-URL: http://hdl.handle.net/10.1080/10168737.2012.676059 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:3:p:463-486 Template-Type: ReDIF-Article 1.0 Author-Name: Costas Karfakis Author-X-Name-First: Costas Author-X-Name-Last: Karfakis Title: On Money and Output in the Euro Area: Is Money Redundant? Abstract: This paper examines the relationship between money and future movements in output at business-cycle frequencies in the euro area. Importantly, the evidence suggests that the money stock is found to significantly affect output independent of the real interest rate. This finding supports the argument made by Meltzer (2001) that the effects of monetary policy actions on the real economy are not fully captured by the short-term real rate. Journal: International Economic Journal Pages: 487-496 Issue: 3 Volume: 27 Year: 2013 Month: 9 X-DOI: 10.1080/10168737.2012.676060 File-URL: http://hdl.handle.net/10.1080/10168737.2012.676060 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:3:p:487-496 Template-Type: ReDIF-Article 1.0 Author-Name: Rogelio V. Mercado Author-X-Name-First: Rogelio V. Author-X-Name-Last: Mercado Title: Emerging Asia Equity Home Bias and Financial Integration Abstract: Equity home bias remains a phenomenon and a puzzle. Recent studies show the importance of financial integration in explaining the observed decline of equity home bias in advanced economies. This paper takes a step in understanding this relationship in the context of Emerging Asia. Stock market ratios and the mean-variance approach are used to construct measures of equity home bias; while foreign direct investments and time-varying global betas are used to derive measures of financial integration. These measures provide evidence that equity home bias has declined in recent years and progress has been made toward greater financial integration in the region. Fixed-effects panel regression was used to determine whether the factors that contribute to the decline of the bias in advanced economies -- including financial integration -- are relevant for Emerging Asia. Results show that a higher initial level of equity home bias and a greater financial integration lower the bias; while a larger stock market raises it. These findings concur with those for advanced economies. As in advanced economies, better quality of institutions and larger bank assets generally lower equity home bias, although insignificantly. However, unlike in advanced economies, country-specific risks are important in explaining the decline of the bias in Emerging Asia. Journal: International Economic Journal Pages: 497-524 Issue: 4 Volume: 27 Year: 2013 Month: 12 X-DOI: 10.1080/10168737.2012.719921 File-URL: http://hdl.handle.net/10.1080/10168737.2012.719921 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:4:p:497-524 Template-Type: ReDIF-Article 1.0 Author-Name: Nabil Annabi Author-X-Name-First: Nabil Author-X-Name-Last: Annabi Author-Name: Maxime Fougere Author-X-Name-First: Maxime Author-X-Name-Last: Fougere Author-Name: Min Li Author-X-Name-First: Min Author-X-Name-Last: Li Title: Foreign Competition and Income Distribution in Canada: A Dynamic Microsimulation CGE Model Analysis Abstract: In this study we assess the impact of increased foreign competition on labour markets and income distribution in Canada, using a newly developed dynamic microsimulation computable general equilibrium (CGE) model. The main findings of the simulations conducted are that the decline in world prices of imports and exports of the manufacturing products during the 2000s induces small increases in low-income rates and inequality in the short run as well as contractions in the export-oriented manufacturing sectors. In the long run, however, it enhances capital accumulation, particularly in the primary and service sectors, increases real GDP and reduces low-income rates, especially among families with two persons or more. Journal: International Economic Journal Pages: 525-547 Issue: 4 Volume: 27 Year: 2013 Month: 12 X-DOI: 10.1080/10168737.2012.682077 File-URL: http://hdl.handle.net/10.1080/10168737.2012.682077 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:4:p:525-547 Template-Type: ReDIF-Article 1.0 Author-Name: Sherif Khalifa Author-X-Name-First: Sherif Author-X-Name-Last: Khalifa Title: Cyclical Job Upgrading, Wage Inequality, and Unemployment Dynamics Abstract: This paper studies the implications of a monetary policy shock on the skill premium and the unemployment persistence. A VAR demonstrates that a contractionary policy induces a lagged decline in the skill premium and a larger and more persistent increase in the unemployment ratio of the unskilled relative to that of the skilled. A new Keynesian framework characterized by labor search frictions is developed. The labor force is divided into high and low educated. Firms post two types of vacancies: the complex that can be matched with the high educated, and the simple that can be matched with both the high and the low educated. A positive shock to the nominal interest rate induces the high educated unemployed to compete with the low educated, as they increase their search intensity for simple vacancies. As the high educated occupy simple vacancies, they crowd out the low educated into unemployment. This downgrading of jobs, and the subsequent crowding out of the low educated into unemployment, provide a possible explanation to unemployment persistence and the response of the skill premium. Journal: International Economic Journal Pages: 549-585 Issue: 4 Volume: 27 Year: 2013 Month: 12 X-DOI: 10.1080/10168737.2012.685886 File-URL: http://hdl.handle.net/10.1080/10168737.2012.685886 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:4:p:549-585 Template-Type: ReDIF-Article 1.0 Author-Name: Nilufer Ozdemir Author-X-Name-First: Nilufer Author-X-Name-Last: Ozdemir Title: Market Structure, Excess Returns in the Foreign Exchange Market and Deviations from Uncovered Interest Parity Abstract: This paper contributes to the uncovered interest parity literature by analyzing the role of financial market concentration in determining deviations from the uncovered interest parity condition. The theoretical section of the paper demonstrates that countries with concentrated financial markets will increase their welfare by discouraging financial flows through their manipulation of domestic interest rates. The empirical results support this finding and indicate that the correlation between financial flows and excess returns changes when the concentration ratio is above 0.68. This article suggests that the recent increases in banking sector concentrations around the world are likely to limit international financial flows and this will have welfare implications in countries with concentrated and competitive financial markets. Journal: International Economic Journal Pages: 587-608 Issue: 4 Volume: 27 Year: 2013 Month: 12 X-DOI: 10.1080/10168737.2012.708050 File-URL: http://hdl.handle.net/10.1080/10168737.2012.708050 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:4:p:587-608 Template-Type: ReDIF-Article 1.0 Author-Name: Kazunobu Hayakawa Author-X-Name-First: Kazunobu Author-X-Name-Last: Hayakawa Author-Name: Kiyoyasu Tanaka Author-X-Name-First: Kiyoyasu Author-X-Name-Last: Tanaka Author-Name: Yasushi Ueki Author-X-Name-First: Yasushi Author-X-Name-Last: Ueki Title: Transport Modal Choice by Multinational Firms: Firm-level Evidence from Southeast Asia Abstract: We examine transport-mode decisions by multinational firms to shed light on the role of freight logistics in multinational activity. Using a firm-level survey in Southeast Asia, we show that foreign ownership has a significantly positive and quantitatively large impact on the likelihood that air/sea transportation is chosen relative to truck shipping. This result is robust to the shipping distance, cross-border freight, and transport infrastructure. Both foreign-owned exporters and importers also tend to use air/sea transportation. Thus, our analysis presents a new distinction between multinational and domestic firms in their decision over transport modes. Journal: International Economic Journal Pages: 609-623 Issue: 4 Volume: 27 Year: 2013 Month: 12 X-DOI: 10.1080/10168737.2012.719920 File-URL: http://hdl.handle.net/10.1080/10168737.2012.719920 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:4:p:609-623 Template-Type: ReDIF-Article 1.0 Author-Name: Huiran Pan Author-X-Name-First: Huiran Author-X-Name-Last: Pan Author-Name: Chun Wang Author-X-Name-First: Chun Author-X-Name-Last: Wang Title: Co-movement of Government Debt and Economic Growth in the Euro-area: A Bayesian Dynamic Factor Model Analysis Abstract: This paper applies a Bayesian dynamic factor model to analyze the co-movement of government debt and economic growth in 12 euro-area countries from 1970--2009. We decompose the variations in output growth and government debt into three distinct factors: (i) a common factor capturing co-movement across the 24 series in all 12 countries; (ii) a country factor common to the two series in each country; and (iii) an idiosyncratic factor specific to each series. We find that the common factor affects output growth positively but government debt negatively. Furthermore, the common factor dominates the country and idiosyncratic factors in accounting for the fluctuations in output growth and government debt, especially in the period 1999--2009 when the common factor became less volatile but more important for macroeconomic fluctuations. Our results suggest some convergence in output growth and government debt in the 12 euro-area countries after the launch of the euro. Journal: International Economic Journal Pages: 625-643 Issue: 4 Volume: 27 Year: 2013 Month: 12 X-DOI: 10.1080/10168737.2012.719916 File-URL: http://hdl.handle.net/10.1080/10168737.2012.719916 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:4:p:625-643 Template-Type: ReDIF-Article 1.0 Author-Name: Aziz N. Berdiev Author-X-Name-First: Aziz N. Author-X-Name-Last: Berdiev Author-Name: Chun-Ping Chang Author-X-Name-First: Chun-Ping Author-X-Name-Last: Chang Title: Explaining Voter Turnout in Taiwan Legislative Elections Abstract: This paper specifies a dynamic model of voter turnout in Taiwan legislative elections using the generalized method of moments (GMM) model. We utilize data recorded over the 1998--2008 period, covering 23 counties of Taiwan. We find that previous levels of voter turnout are significantly associated with current levels of voter turnout. In particular, we provide strong evidence for a dynamic decline in voter turnout in Taiwan legislator elections. We also find that the perceived closeness of the election by the potential voters prior to the election, greater number of parties and densely populated areas, are significantly associated with higher voter turnout, whereas larger costs of voting, greater educational inequality and higher levels of education contribute to lower electoral participation. Further, population stability and disposable income have a limited impact on voter turnout. Journal: International Economic Journal Pages: 645-661 Issue: 4 Volume: 27 Year: 2013 Month: 12 X-DOI: 10.1080/10168737.2012.719915 File-URL: http://hdl.handle.net/10.1080/10168737.2012.719915 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:4:p:645-661 Template-Type: ReDIF-Article 1.0 Author-Name: Juan Blyde Author-X-Name-First: Juan Author-X-Name-Last: Blyde Title: Paving the Road to Export: Assessing the Trade Impact of Road Quality Abstract: Assessing the trade impacts of domestic transport costs is data demanding and analyses that examine the effects of road quality, a critical aspect in regional and public policy, practically do not exist in the international trade literature. The few studies available rely mostly on distance-based measures as proxies of transport costs which impede analyzing the trade effects of transport-infrastructure improvements. In this paper, we combine highly disaggregated records of export flows with detailed geo-referenced information of the Colombian transport network, including its road quality, as well as real measures of transport costs of shipping goods within the country to measure the trade impacts of improving road quality. We find that the trade effects of improvements in road quality are relatively small on average; however, there is considerable heterogeneity in the magnitude of the effects. We show that longer routes have larger shares of their roads in poor conditions; accordingly, the trade impacts of shipments originated in remote regions are found to be quite substantial. Journal: International Economic Journal Pages: 663-681 Issue: 4 Volume: 27 Year: 2013 Month: 12 X-DOI: 10.1080/10168737.2012.733721 File-URL: http://hdl.handle.net/10.1080/10168737.2012.733721 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:4:p:663-681 Template-Type: ReDIF-Article 1.0 Author-Name: Imam M. Alam Author-X-Name-First: Imam M. Author-X-Name-Last: Alam Author-Name: Shahina Amin Author-X-Name-First: Shahina Author-X-Name-Last: Amin Author-Name: Janet M. Rives Author-X-Name-First: Janet M. Author-X-Name-Last: Rives Title: Occupational Safety among Working Children in the Export Sector of Bangladesh Abstract: Consumers in the United States are reluctant to purchase imported products made using child labor, because working is considered harmful to children. This research uses 2002--2003 survey data to investigate whether illness or injury related to occupational hazards depends on whether a child works in the export sector in Bangladesh. Our results indicate that working in the export sector does not significantly contribute to illness or injury. We further analyze whether working in the export sector causes severe illness or injury, but we find no significant relationship between children's work in the export sector and the incidence of severe illness or injury. Our findings underscore the importance workplace safety compliance in the export sector. Journal: International Economic Journal Pages: 683-695 Issue: 4 Volume: 27 Year: 2013 Month: 12 X-DOI: 10.1080/10168737.2012.733720 File-URL: http://hdl.handle.net/10.1080/10168737.2012.733720 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:27:y:2013:i:4:p:683-695 Template-Type: ReDIF-Article 1.0 Author-Name: Chung-Fu Lai Author-X-Name-First: Chung-Fu Author-X-Name-Last: Lai Title: The Choice of Exchange-rate Regime in the Framework of New Open Economy Macroeconomics Abstract: This paper extends the model setup of Devereux and Engel (1998) to investigate how consumption home bias, capital mobility, and price-setting behavior affect the consumption volatility, expected level of consumption, and the welfare performance under alternative exchange rate regimes for a country facing foreign monetary shock. The paper then discusses the issue of the choice of exchange rate regime. According to the analysis of theoretical derivation and simulation, the following conclusions are made. First, the variance of domestic consumption is lowest under a floating exchange rate with pricing-to-market (PTM model for short), and the variance of consumption under floating exchange rate with producer-currency pricing (the PCP model for short) depends on the degree of capital mobility, the share of tradable goods, and the degree of home bias. Secondly, the fixed exchange rate (FER) will dominate the floating exchange rate in terms of the expected level of consumption. Thirdly, from the perspective of welfare performance, a floating exchange rate with pricing-to-market (PTM model) is preferable to a fixed exchange rate. A fixed exchange rate dominates a floating exchange rate with producer-currency pricing (PCP model), and the lower degree of capital mobility induces a higher welfare under fixed exchange rate but a lower welfare under PTM and PCP models. Journal: International Economic Journal Pages: 1-35 Issue: 1 Volume: 28 Year: 2014 Month: 3 X-DOI: 10.1080/10168737.2013.878371 File-URL: http://hdl.handle.net/10.1080/10168737.2013.878371 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:1:p:1-35 Template-Type: ReDIF-Article 1.0 Author-Name: Chahir Zaki Author-X-Name-First: Chahir Author-X-Name-Last: Zaki Title: On Trade Policies and Wage Disparity: Evidence from Egyptian Microeconomic Data Abstract: This paper proposes an empirical investigation of the effect of different trade barriers on wages in Egypt. The effect of trade barriers on wage disparity has been widely discussed at both empirical and public policy levels. This debate has mainly dealt with traditional tariff barriers. Less attention has been attributed to other barriers, such as non-tariff measures and red tape costs. However, these barriers -- and in particular red tape costs --impede more than tariffs in developing countries. Thus, using a microeconomic dataset, this paper assesses to what extent different trade barriers affected wage disparities and employment in Egypt. These disparities are studied in three dimensions: on gender (males versus females), qualification (skilled versus unskilled), and regional (urban versus rural workers). The main findings show that red tape barriers have a higher impact than traditional tariffs on wage disparity. Female and blue-collar workers are more affected by such barriers. The effect of trade barriers on regional wage disparity seems to be less important then gender and qualification. Finally, when the effects of observable worker characteristics are filtered out, it turns out that wage premia are negatively affected by all trade barriers. Journal: International Economic Journal Pages: 37-69 Issue: 1 Volume: 28 Year: 2014 Month: 3 X-DOI: 10.1080/10168737.2012.759984 File-URL: http://hdl.handle.net/10.1080/10168737.2012.759984 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:1:p:37-69 Template-Type: ReDIF-Article 1.0 Author-Name: Martin Altemeyer-Bartscher Author-X-Name-First: Martin Author-X-Name-Last: Altemeyer-Bartscher Author-Name: Anil Markandya Author-X-Name-First: Anil Author-X-Name-Last: Markandya Author-Name: Dirk T. G. R�bbelke Author-X-Name-First: Dirk T. G. Author-X-Name-Last: R�bbelke Title: International Side-payments to Improve Global Public Good Provision when Transfers are Refinanced through a Tax on Local and Global Externalities Abstract: This paper discusses a tax-transfer scheme that aims to address the under-provision problem associated with the private supply of international public goods and to bring about Pareto optimal allocations internationally. In particular, we consider the example of the global public good 'climate stabilization', both in an analytical and a numerical simulation model. The proposed scheme levies Pigouvian taxes globally, while international side-payments are employed in order to provide incentives to individual countries for not taking a free-ride from the international Pigouvian tax scheme. The side-payments, in turn, are financed via environmental taxes. As a distinctive feature, we take into account ancillary benefits that may be associated with local public characteristics of climate policy. We determine the positive impact that ancillary effects may exert on the scope for financing side-payments via environmental taxation. A particular attractive feature of ancillary benefits is that they arise shortly after the implementation of climate policies and therefore yield an almost immediate payback of investments in abatement efforts. Especially in times of high public debt levels, long periods of amortization would tend to reduce political support for investments in climate policy. Journal: International Economic Journal Pages: 71-93 Issue: 1 Volume: 28 Year: 2014 Month: 3 X-DOI: 10.1080/10168737.2012.759986 File-URL: http://hdl.handle.net/10.1080/10168737.2012.759986 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:1:p:71-93 Template-Type: ReDIF-Article 1.0 Author-Name: S�verine Menguy Author-X-Name-First: S�verine Author-X-Name-Last: Menguy Title: Taxation Rates and Stabilization in the Framework of Supply-side Distortions Abstract: We use a simple macroeconomic modeling of a monetary union made of two structurally heterogeneous countries, with distortions in the supply function. We find that higher taxes are always output stabilizing in the event of demand shocks, but that stronger automatic stabilizers are often inflation destabilizing in the framework of large supply-side distortions. These inflationary risks are only limited if the transmission mechanisms of economic policies are more efficient, if countries are weakly open, and if economic authorities care more about price stability than instrument smoothing. Furthermore, our model also shows that in the event of supply shocks, higher taxation rates would be inflation as well as output destabilizing, and all the more as distortions are accentuated in the supply function. Therefore, reducing taxes may often improve economic stabilization. Indeed, there would be a 'critical level of supply-side distortions' above which some of the stabilization properties of automatic stabilizers become perverse even in case of demand shocks. Furthermore, the necessity to reduce the tax burden would be much more acute in the smallest and most open European countries. Journal: International Economic Journal Pages: 95-120 Issue: 1 Volume: 28 Year: 2014 Month: 3 X-DOI: 10.1080/10168737.2012.759985 File-URL: http://hdl.handle.net/10.1080/10168737.2012.759985 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:1:p:95-120 Template-Type: ReDIF-Article 1.0 Author-Name: Hamid Mohtadi Author-X-Name-First: Hamid Author-X-Name-Last: Mohtadi Author-Name: Stefan Ruediger Author-X-Name-First: Stefan Author-X-Name-Last: Ruediger Title: Intellectual Property Rights and Growth: Is there a Threshold Effect? Abstract: Recent WTO agreements have forced developing countries to adopt stronger intellectual property rights (IPRs). However, theoretical research is critical at best, but largely undecided, on the impact of stronger IPRs on economies at lower stages of development. This paper is particularly concerned with a critical empirical examination of the impact of human capital on the relationship between IPRs and economic growth. Using a threshold estimation technique, originally developed by Hansen, the paper discovers a threshold level of human capital (robust to many different variations) such that for countries whose human capital is below this level, tighter intellectual property rights have a negative impact on economic growth, while for countries with human capital above this level, tighter intellectual property rights are unrelated to economic growth. Thus, we find a non-linear relationship associated with this switching regression. Journal: International Economic Journal Pages: 121-135 Issue: 1 Volume: 28 Year: 2014 Month: 3 X-DOI: 10.1080/10168737.2012.759987 File-URL: http://hdl.handle.net/10.1080/10168737.2012.759987 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:1:p:121-135 Template-Type: ReDIF-Article 1.0 Author-Name: Andrea Fracasso Author-X-Name-First: Andrea Author-X-Name-Last: Fracasso Author-Name: Giuseppe Vittucci Marzetti Author-X-Name-First: Giuseppe Author-X-Name-Last: Vittucci Marzetti Title: International R&D Spillovers, Absorptive Capacity and Relative Backwardness: A Panel Smooth Transition Regression Model Abstract: We investigate how a country's absorptive capacity and relative backwardness affect the impact of international R&D spillovers on domestic Total Factor Productivity (TFP). To account for nonlinearities, we adopt a Panel Smooth Transition Regression approach, where a country's TFP elasticity to the foreign R&D stock is allowed to change smoothly across various identified extreme values, and the change is related to observable transition variables: human capital (capturing the country's absorptive capacity) and relative backwardness. The results suggest that absorptive capacity is positively associated with international R&D spillovers. In contrast with previous results, relative backwardness is instead found to have a negative and significant impact on international knowledge spillovers. Journal: International Economic Journal Pages: 137-160 Issue: 1 Volume: 28 Year: 2014 Month: 3 X-DOI: 10.1080/10168737.2013.787109 File-URL: http://hdl.handle.net/10.1080/10168737.2013.787109 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:1:p:137-160 Template-Type: ReDIF-Article 1.0 Author-Name: Ozlem Yaylaci Author-X-Name-First: Ozlem Author-X-Name-Last: Yaylaci Author-Name: Serge Shikher Author-X-Name-First: Serge Author-X-Name-Last: Shikher Title: What Would Korea-US Free Trade Agreement Bring? Abstract: ABSTRACTThis paper uses a computable model of trade to forecast the effects of the US--Korea free trade agreement on the manufacturing sector. The model uses the Eaton--Kortum methodology to explain intra-industry trade instead of the usual Armington assumption. It is parameterized using 2005 data for 15 industries and 53 countries. The results show that implementing KORUS would increase the US manufacturing exports to Korea by 56.9% and Korean manufacturing exports to the US by 18.9%. It would also increase manufacturing employment by 26,500 jobs in Korea and 34,200 jobs in the US. In addition, KORUS would lead to significant changes in the patterns of trade and production. The US and Korea would increase their specialization in the industries where they have strong technological comparative advantages. Finally, KORUS would increase welfare in both countries, but only modestly: by 0.27% in Korea and 0.013% in the US. Journal: International Economic Journal Pages: 161-182 Issue: 1 Volume: 28 Year: 2014 Month: 3 X-DOI: 10.1080/10168737.2013.787108 File-URL: http://hdl.handle.net/10.1080/10168737.2013.787108 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:1:p:161-182 Template-Type: ReDIF-Article 1.0 Author-Name: Farhad Rassekh Author-X-Name-First: Farhad Author-X-Name-Last: Rassekh Author-Name: Omid Ranjbar Author-X-Name-First: Omid Author-X-Name-Last: Ranjbar Title: An Empirical Investigation of the Ratchet Effect in the OECD, 1985--2009 Abstract: This paper employs a reduced form structuralist model of inflation in the OECD over the period 1985--2009 to find out whether domestic prices respond symmetrically to rising and falling import prices. We find that the response is asymmetrical: domestic prices rise when import prices rise but they do not fall when import prices fall. Our finding thus confirms the presence of a ratchet effect in the sample countries during the sample period, and implies that factors -- such as exchange rate fluctuations and movements in tariff rates -- that influence import prices tend to be inflationary. Journal: International Economic Journal Pages: 183-190 Issue: 1 Volume: 28 Year: 2014 Month: 3 X-DOI: 10.1080/10168737.2013.878372 File-URL: http://hdl.handle.net/10.1080/10168737.2013.878372 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:1:p:183-190 Template-Type: ReDIF-Article 1.0 Author-Name: Tamat Sarmidi Author-X-Name-First: Tamat Author-X-Name-Last: Sarmidi Author-Name: Siong Hook Law Author-X-Name-First: Siong Author-X-Name-Last: Hook Law Author-Name: Yaghoob Jafari Author-X-Name-First: Yaghoob Author-X-Name-Last: Jafari Title: Resource Curse: New Evidence on the Role of Institutions Abstract: This paper attempts to provide a probable answer to a longstanding resource curse puzzle; i.e., why resource-rich nations grow at a slower rate compared with less fortunate ones. Using an innovative threshold estimation technique, the empirical results reveal that there is a threshold effect in the natural resources--economic growth relationship. We find that the impact of natural resources is meaningful to economic growth only after a certain threshold point of institutional quality has been attained. The results also shed light on the fact that the nations that have low institutional quality depend heavily on natural resources while countries with high quality institutions are relatively less dependent on natural resources to generate growth. Journal: International Economic Journal Pages: 191-206 Issue: 1 Volume: 28 Year: 2014 Month: 3 X-DOI: 10.1080/10168737.2013.787110 File-URL: http://hdl.handle.net/10.1080/10168737.2013.787110 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:1:p:191-206 Template-Type: ReDIF-Article 1.0 Author-Name: Thomas Barnebeck Andersen Author-X-Name-First: Thomas Barnebeck Author-X-Name-Last: Andersen Author-Name: Peter Sandholt Jensen Author-X-Name-First: Peter Sandholt Author-X-Name-Last: Jensen Title: Is Africa's Recent Growth Sustainable? Abstract: In this paper we argue that the answer, to the question of whether Africa's recent growth is sustainable, is yes. Our optimism rests on the finding that differences in the level of institutional quality predict cross-country variation in African economic growth during the period 1995-2011. This finding is quite robust. It holds in OLS, LAD and 2SLS settings; it holds for different measures of institutions and different measures of economic growth; and it holds for the period before and the period after the global financial crisis. We also show that changes in institutional quality predict cross-country variation in African economic growth. Moreover, if we split our sample into two equally sized groups, a high-growth and a low-growth group, then the high-growth group has experienced a statistically significant increase in institutional quality, whereas the low-growth group has not. Overall, this makes it probable that institutions have played an important part in Africa's recent growth acceleration. The continent has seen many false dawns, caused in large part by increases in commodity prices, but a growth acceleration driven by institutions is likely to signify a genuine African takeoff. Journal: International Economic Journal Pages: 207-223 Issue: 2 Volume: 28 Year: 2014 Month: 6 X-DOI: 10.1080/10168737.2013.825308 File-URL: http://hdl.handle.net/10.1080/10168737.2013.825308 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2013:i:2:p:207-223 Template-Type: ReDIF-Article 1.0 Author-Name: Bianka Dettmer Author-X-Name-First: Bianka Author-X-Name-Last: Dettmer Title: International Service Transactions: Is Time a Trade Barrier in a Connected World? Abstract: Firms' international fragmentation of production has recently widened its focus from outsourcing of intermediates to off-shoring of business services such as software program development and international call center networks. Although many services are intangible and non-storable, gravity model estimates show that geographical distance between business partners matters less for commercial service transactions. Rather, time zones can be a driving force of international service trade by allowing for continuous operation over a 24 hours business day (continuity effect) when a proper division of labor is feasible and countries are connected to electronic communications infrastructure (ICT). But even when ICT provides alternatives for face-to-face interaction, time zones can act as a barrier when coordination problems with sleeping business partners occur (synchronization effect). In this paper, we find empirical evidence for the continuity effect in trade of business services, which is robust to measurement and sample size. Even more important is that the effect of time zones on service trade depends on access to ICT. An improvement of ICT infrastructure will affect business service trade at long time zone distances significantly more than trade at short time zone distances. Journal: International Economic Journal Pages: 225-254 Issue: 2 Volume: 28 Year: 2014 Month: 6 X-DOI: 10.1080/10168737.2013.825305 File-URL: http://hdl.handle.net/10.1080/10168737.2013.825305 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2013:i:2:p:225-254 Template-Type: ReDIF-Article 1.0 Author-Name: Georgios Karras Author-X-Name-First: Georgios Author-X-Name-Last: Karras Title: Is Fiscal Policy More Effective During Cyclical Downturns? Abstract: Using a panel data set of 61 countries for the 1952-2007 period, the paper shows that fiscal policy is more potent during downturns than during expansions, and that the difference is substantial: the fiscal multiplier is twice as large when output is below its long-term trend. In particular, the empirical results suggest that during expansions the output 'multiplier' is less than one, private consumption is crowded out, and the response of investment is weak; whereas during downturns the output multiplier is greater than one, private consumption is not crowded out, and the response of investment is strong. Differences between expansion and downturn multipliers are found to be greater in low-income countries. Journal: International Economic Journal Pages: 255-271 Issue: 2 Volume: 28 Year: 2014 Month: 6 X-DOI: 10.1080/10168737.2013.825304 File-URL: http://hdl.handle.net/10.1080/10168737.2013.825304 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2013:i:2:p:255-271 Template-Type: ReDIF-Article 1.0 Author-Name: Nicolas Peridy Author-X-Name-First: Nicolas Author-X-Name-Last: Peridy Author-Name: Javad Abedini Author-X-Name-First: Javad Author-X-Name-Last: Abedini Title: Trade Effects of Regional Integration in Imperfect Competition: Evidence from the Greater Arab Free Trade Area (GAFTA) Abstract: This article aims to provide new insights into trade effects of the Greater Arab Free Trade Area (GAFTA), using an imperfect competition framework. The model combines the new gravity model approach with supply-demand export equations in imperfect competition. In this regard, the role of scale economies, product varieties and expectations is explored. Facing the lack of international data on scale economies, we also develop a translog production system which makes it possible to obtain reliable estimates of this factor. For a more rigorous treatment of the endogeneity problem in the model, we make use of an instrumental GMM panel estimator. Results show limited effects of GAFTA on regional trade in imperfect competition, due to market segmentation and the predominance of inter-industry trade. In addition, the fitted intra-GAFTA trade values are far beyond the actual ones. This suggests that GAFTA countries could benefit from deeper regional trade integration. In this regard, the Arab Spring creates new opportunities to reinforce trade integration as a means of grasping additional trade gains in this area. Journal: International Economic Journal Pages: 273-292 Issue: 2 Volume: 28 Year: 2014 Month: 6 X-DOI: 10.1080/10168737.2013.825306 File-URL: http://hdl.handle.net/10.1080/10168737.2013.825306 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2013:i:2:p:273-292 Template-Type: ReDIF-Article 1.0 Author-Name: Tsuyoshi Toshimitsu Author-X-Name-First: Tsuyoshi Author-X-Name-Last: Toshimitsu Title: Strategic Product R&D Investment Policy under International Rivalry in the Presence of Demand Spillover Effects Abstract: We develop a model of product (i.e., quality-improving) research and development (R&D) investment competition in a horizontally differentiated duopoly. In particular, based on a third-country market model, we consider the optimal product R&D investment policy under international rivalry in the presence of demand spillover effects associated with improving the quality level of a product. We show how the optimality of a non-cooperative and a cooperative R&D investment policy depends on the strength of demand spillover effects. Furthermore, we consider the same issues in the case of heterogeneous consumers and alternative utility functions. Journal: International Economic Journal Pages: 293-309 Issue: 2 Volume: 28 Year: 2014 Month: 6 X-DOI: 10.1080/10168737.2014.905619 File-URL: http://hdl.handle.net/10.1080/10168737.2014.905619 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2013:i:2:p:293-309 Template-Type: ReDIF-Article 1.0 Author-Name: Biswajit Mohanty Author-X-Name-First: Biswajit Author-X-Name-Last: Mohanty Author-Name: N.R. Bhanumurthy Author-X-Name-First: N.R. Author-X-Name-Last: Bhanumurthy Title: Exchange Rate Regimes and Inflation: Evidence from India Abstract: Exchange rate stability is crucial for inflation management as a stable rate is expected to reduce domestic inflation pressures through a 'policy discipline effect' - restricting money supply growth, and a 'credibility effect' - inducing higher money demand and reduced velocity of money. Alternatively, the 'impossibility trillema' of Mundell (1961a, 1961b) predicts that in the presence of an open capital account, a stable exchange rate may lead to lack of control on monetary policy and, hence, higher inflation. Using a monetary model of Inflation, this paper investigates the impact of the 'empirically-claimed' de facto stable exchange rate regime on inflation in India during different sub-periods of exchange rate stability. The results show that the impact of exchange rate regime on inflation is not visible in the Indian case, which could be because of the offsetting sterilization policy undertaken by the Reserve Bank of India (RBI) during expansionary money supply growth resulting from its large-scale intervention to even out exchange rate volatility. Journal: International Economic Journal Pages: 311-332 Issue: 2 Volume: 28 Year: 2014 Month: 6 X-DOI: 10.1080/10168737.2014.905618 File-URL: http://hdl.handle.net/10.1080/10168737.2014.905618 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2013:i:2:p:311-332 Template-Type: ReDIF-Article 1.0 Author-Name: Ulrich Fritsche Author-X-Name-First: Ulrich Author-X-Name-Last: Fritsche Author-Name: Christian Pierdzioch Author-X-Name-First: Christian Author-X-Name-Last: Pierdzioch Author-Name: Jan-Christoph R�lke Author-X-Name-First: Jan-Christoph Author-X-Name-Last: R�lke Author-Name: Georg Stadtmann Author-X-Name-First: Georg Author-X-Name-Last: Stadtmann Title: A Note on Forecasting the Euro: Do Forecasters Have an Asymmetric Loss Function? Abstract: Based on the approach advanced by Elliott, Komunjer, and Timmermann (2005), we analyzed whether the loss function of a sample of exchange-rate forecasters is asymmetric in the forecast error. Using forecasts of the dollar/euro exchange rate, we found that the shape of the loss function varies across forecasters. Some forecasters appear to make forecasts under an asymmetric loss function, while a symmetric loss function seems to describe well the loss function of other forecasters. Accounting for an asymmetric loss function does not necessarily make forecasts 'look' rational. Journal: International Economic Journal Pages: 333-343 Issue: 2 Volume: 28 Year: 2014 Month: 6 X-DOI: 10.1080/10168737.2013.810661 File-URL: http://hdl.handle.net/10.1080/10168737.2013.810661 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2013:i:2:p:333-343 Template-Type: ReDIF-Article 1.0 Author-Name: Kolawole Ogundari Author-X-Name-First: Kolawole Author-X-Name-Last: Ogundari Author-Name: Adebayo B Aromolaran Author-X-Name-First: Adebayo B Author-X-Name-Last: Aromolaran Title: Impact of Education on Household Welfare in Nigeria Abstract: Human capital development, especially higher educational attainment, attaches high premium to its expected economic benefits, in form of better welfare. This study investigates the effect of educational attainment of household head on two indicators of household welfare, namely labour market earnings and household per capita total expenditure on food and non-food items in Nigeria. The study uses the Double Hurdle (DH) model and Quantile Regression (QR) to address these objectives. The empirical results show that returns to schooling are substantially higher at the tertiary level of education compared with primary, secondary, and postgraduate levels of education in Nigeria. Furthermore, additional years of tertiary education attainment by household heads was found to increase household per capita total expenditure more than additional years of primary, secondary and postgraduate education. The implication of these findings is that the improvements in economic welfare of households in Nigerian is driven more by the attainment of tertiary education by household heads, relative to other levels of education. Journal: International Economic Journal Pages: 345-364 Issue: 2 Volume: 28 Year: 2014 Month: 6 X-DOI: 10.1080/10168737.2013.811279 File-URL: http://hdl.handle.net/10.1080/10168737.2013.811279 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2013:i:2:p:345-364 Template-Type: ReDIF-Article 1.0 Author-Name: Friedrich Schneider Author-X-Name-First: Friedrich Author-X-Name-Last: Schneider Title: Work in the Shadow: Micro and Macro Results Abstract: The main focus of this paper is on the shadow economy labor force in OECD, developing and transition countries. As well as informal employment in the rural and non-rural sector, other measures of informal employment, such as the share of women and men, are also shown. The most influential factors on the shadow economy labor force are tax policies and state regulation, which, if they rise, increase shadow economy activities. Furthermore, the discussion of recent micro studies underlines that economic opportunities, the overall burden of the state (taxes and regulations), the general situation on the labor market, and unemployment are crucial for an understanding of the dynamics of the shadow labor force. Journal: International Economic Journal Pages: 365-379 Issue: 3 Volume: 28 Year: 2014 Month: 9 X-DOI: 10.1080/10168737.2014.936924 File-URL: http://hdl.handle.net/10.1080/10168737.2014.936924 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:3:p:365-379 Template-Type: ReDIF-Article 1.0 Author-Name: Robert W. Rutledge Author-X-Name-First: Robert W. Author-X-Name-Last: Rutledge Author-Name: Khondkar E. Karim Author-X-Name-First: Khondkar E. Author-X-Name-Last: Karim Author-Name: Chensheng Li Author-X-Name-First: Chensheng Author-X-Name-Last: Li Title: A Study of the Relationship between Renminbi Exchange Rates and Chinese Stock Prices Abstract: This study examines the relationship between Chinese renminbi (RMB) exchange rates and Chinese stock prices over the full study period of 20 July 2001 to 21 July 2011. The study also investigates the relationship between the exchange rate and ten industry-specific indices. Also examined is the effect of two specific events on the 'exchange rate/stock price' relationship: (1) the easing of exchange rate controls, and (2) the 2008 start of the global financial crisis. A long-run cointegration relationship is found during the full study period between exchange rates and the Shanghai A-share prices, and for nine of ten industry indices. Granger causality in one direction (i.e., from exchange rates to stock prices, or vice versa) or both directions is found for four of the industry-specific indices. Interestingly, both a long-run cointegration relationship and Granger causality are only found during the most volatile period of managed exchanged rates before the global financial crisis. Implications for Chinese monetary policy makers and global investors are provided. Journal: International Economic Journal Pages: 381-403 Issue: 3 Volume: 28 Year: 2014 Month: 9 X-DOI: 10.1080/10168737.2014.913652 File-URL: http://hdl.handle.net/10.1080/10168737.2014.913652 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:3:p:381-403 Template-Type: ReDIF-Article 1.0 Author-Name: Zeynep Senyuz Author-X-Name-First: Zeynep Author-X-Name-Last: Senyuz Author-Name: Emre Yoldas Author-X-Name-First: Emre Author-X-Name-Last: Yoldas Author-Name: Ismail Onur Baycan Author-X-Name-First: Ismail Onur Author-X-Name-Last: Baycan Title: Cyclical Dynamics of the Turkish Economy and the Stock Market Abstract: We analyze the cyclical dynamics of the Turkish economy and the stock market as well as their interactions. We use hidden Markov models that are robust to parameter instability arising from major shifts in economic policy, which have been typically observed in the Turkish economy. These models provide estimates of turning points for the growth, business, and stock market cycles. We identify three states of growth cycles and two states of business cycles in Turkey characterized by different mean estimates. We find that the economy went through five recessions since 1987. Crises are characterized by sharp drops in economic activity and are preceded by slowdowns. These crises are typically followed by strong recoveries during which the economy grows above its long-run average rate. We show that the Turkish stock market goes through three regimes having distinct risk-return dynamics. Bear markets associated with negative returns precede every recession with an average lead time of three quarters, suggesting that the stock market may be a useful forward-looking indicator of the Turkish economy. Journal: International Economic Journal Pages: 405-423 Issue: 3 Volume: 28 Year: 2014 Month: 9 X-DOI: 10.1080/10168737.2013.825307 File-URL: http://hdl.handle.net/10.1080/10168737.2013.825307 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:3:p:405-423 Template-Type: ReDIF-Article 1.0 Author-Name: Panagiotis Pegkas Author-X-Name-First: Panagiotis Author-X-Name-Last: Pegkas Author-Name: Constantinos Tsamadias Author-X-Name-First: Constantinos Author-X-Name-Last: Tsamadias Title: Does Higher Education Affect Economic Growth? The Case of Greece Abstract: The purpose of the study is twofold: first, it presents an extensive review of empirical studies that have examined the relationship between higher education and economic growth. Second, it estimates the effect of higher education on economic growth in Greece over the period 1960-2009. It applies the model introduced by Mankiw, Romer, and Weil (1992) by using the higher enrolment rates as a proxy of human capital. The paper employs cointegration and an error-correction model to test the causal relationship between higher education, physical capital investments and economic growth. The empirical analysis reveals that there is a long-run cointegrating relationship between higher education, physical capital investments and economic growth. The elasticity of economic growth with respect to higher education is 0.52%. The results also suggest that there is evidence of unidirectional long-run and short-run Granger causality running from higher education and physical capital investments to economic growth. Journal: International Economic Journal Pages: 425-444 Issue: 3 Volume: 28 Year: 2014 Month: 9 X-DOI: 10.1080/10168737.2014.894551 File-URL: http://hdl.handle.net/10.1080/10168737.2014.894551 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:3:p:425-444 Template-Type: ReDIF-Article 1.0 Author-Name: Andrey Kudryavtsev Author-X-Name-First: Andrey Author-X-Name-Last: Kudryavtsev Title: When Do Opening Stock Returns Tend to be Higher? Abstract: In this study, I make an effort to formulate a trading rule that would make use of some systematic interday patterns in individual stocks' opening returns. I analyze intraday price data on all the stocks that were S&P 500 Index constituents during the period from 1993 to 2012. I document that if the general market direction of the previous day's opening session is controlled for, then a stock's opening return tends to be higher if, on the previous trading day, its opening return was relatively high (either positive, or higher than the same day's opening market return) and its open-to-close return was relatively low (either non-positive, or lower than or equal to the same day's open-to-close market return). Finally, for the sampling period, I construct two different investment portfolios involving a long position in the stocks on the days when, according to the findings, their opening returns are expected to be high and a short position in the stocks on the days when, according to the findings, their opening returns are expected to be low. Both portfolios are found to yield significantly positive returns, providing evidence for the practical applicability of the documented patterns in opening stock prices. Journal: International Economic Journal Pages: 445-458 Issue: 3 Volume: 28 Year: 2014 Month: 9 X-DOI: 10.1080/10168737.2014.905620 File-URL: http://hdl.handle.net/10.1080/10168737.2014.905620 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:3:p:445-458 Template-Type: ReDIF-Article 1.0 Author-Name: Helmi Hamdi Author-X-Name-First: Helmi Author-X-Name-Last: Hamdi Author-Name: Rashid Sbia Author-X-Name-First: Rashid Author-X-Name-Last: Sbia Author-Name: Bedri Kamil Onur Tas Author-X-Name-First: Bedri Kamil Onur Author-X-Name-Last: Tas Title: Financial Deepening and Economic Growth in Gulf Cooperation Council Countries Abstract: The goal of this study is to investigate the causal relationship between financial development and economic growth in Gulf Cooperation Council (GCC) countries, i.e. Bahrain, Oman, Kuwait, Qatar, United Arab Emirates and Saudi Arabia, over the period 1980-2012. We employ panel unit root tests, and Error Correction Model and cointegration techniques to detect long-run and short-run causalities between the variables used in our study. The overall empirical results reveal that the financial sector development contributes significantly to economic growth in the GCC countries. Our results could be of great interest for policymakers since the financial sector could play a crucial role in lowering the dependency of the governments to oil revenues and could contribute significantly to spur economic growth. Journal: International Economic Journal Pages: 459-473 Issue: 3 Volume: 28 Year: 2014 Month: 9 X-DOI: 10.1080/10168737.2014.913653 File-URL: http://hdl.handle.net/10.1080/10168737.2014.913653 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:3:p:459-473 Template-Type: ReDIF-Article 1.0 Author-Name: Hyung-Gon Jeong Author-X-Name-First: Hyung-Gon Author-X-Name-Last: Jeong Title: The Determinants of Foreign Direct Investment in the Business Services Industry Abstract: This report aims to identify the determinant factors of FDI in the business services industry by examining 20 variables and their impacts on attracting foreign investment in 33 sample countries plus Hong Kong. The results of this study indicate that system-related factor conditions and demand conditions have a strong correlation to FDI. Among the variables under system-related factor conditions, four (bribery and corruption, transparency, intellectual property rights (IPR), and ease of doing business) greatly influence the amount of FDI in the business services industry. Among the variables under demand conditions, three (the cost of living index, office rent, and GDP) are key. At the same time, this paper concludes that the aforementioned factors influence not only the business services sector, but the manufacturing industry's FDI as well. Another main finding of this paper is that the FDI in the business services industry is more frequently found in more developed economies. For the market seeking and efficiency-seeking FDI, the quality of system-related factor conditions and the size of GDP are of particular importance for FDI in the business services industry. Journal: International Economic Journal Pages: 475-495 Issue: 3 Volume: 28 Year: 2014 Month: 9 X-DOI: 10.1080/10168737.2014.913651 File-URL: http://hdl.handle.net/10.1080/10168737.2014.913651 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:3:p:475-495 Template-Type: ReDIF-Article 1.0 Author-Name: Philipp Matros Author-X-Name-First: Philipp Author-X-Name-Last: Matros Author-Name: Enzo Weber Author-X-Name-First: Enzo Author-X-Name-Last: Weber Title: Non-stationary Interest Rate Differentials and the Role of Monetary Policy Abstract: The present work deals with a frequently detected failure of the uncovered interest rate parity (UIP) - the absence of bivariate cointegration between domestic and foreign interest rates. We explain the non-stationarity of the interest differential via central bank reactions to exchange rate variations. Thereby, the exchange rate in levels introduces an additional stochastic trend into the system. Trivariate cointegration between the interest rates and the exchange rate accounts for the missing stationarity property of the interest differential. We apply the concept to the case of Turkey and Europe, where we can validate the theoretical considerations by multivariate time series techniques. Journal: International Economic Journal Pages: 497-512 Issue: 3 Volume: 28 Year: 2014 Month: 9 X-DOI: 10.1080/10168737.2014.912248 File-URL: http://hdl.handle.net/10.1080/10168737.2014.912248 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:3:p:497-512 Template-Type: ReDIF-Article 1.0 Author-Name: Mazhar Y. Mughal Author-X-Name-First: Mazhar Y. Author-X-Name-Last: Mughal Author-Name: Junaid Ahmed Author-X-Name-First: Junaid Author-X-Name-Last: Ahmed Title: Remittances and Business Cycles: Comparison of South Asian Countries Abstract: South Asia is one of the world's principal remittance-receiving regions. This study examines the home and host business cycles of migrant remittance flows to the region. Employing the Structural Vector Autoregression (SVAR) technique, the remittance behaviour of the region's four main countries is compared. Remittances to India and Pakistan show a mainly acyclical behaviour with respect to the output of the four host regions, and a countercyclical behaviour with respect to home output. In contrast, remittances to the two smaller economies of Bangladesh and Sri Lanka are found to be mainly procyclical. The study shows that the macroeconomic remittance behaviour varies with respect to the importance of remittance flows in the home economy. Moreover, remittance behaviour seems to respond more to home economy specificities than to those of the different regions that host the migrants from the developing countries. Journal: International Economic Journal Pages: 513-541 Issue: 4 Volume: 28 Year: 2014 Month: 12 X-DOI: 10.1080/10168737.2014.920895 File-URL: http://hdl.handle.net/10.1080/10168737.2014.920895 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:4:p:513-541 Template-Type: ReDIF-Article 1.0 Author-Name: Lukas Mohler Author-X-Name-First: Lukas Author-X-Name-Last: Mohler Title: Variety Gains and the Extensive Margin of Trade Abstract: Findings from the literature suggest that previous estimates of the variety gains from trade are too small because of the imprecise measurement of the imported variety set under the Armington assumption. In this contribution, the lambda ratios as presented in Feenstra (1994) are first modified by assuming that all import variations are due to extensive margin adjustments. Under this extreme assumption, variety gains increase by a factor of six compared with the baseline Armington product-country variety differentiation case. Second, results from the literature on multi-product firms are used to obtain a more realistic magnitude of the extensive margin of imports by accounting for the entry and exit of firms as well as for product turnover within firms. It is found that welfare gains still increase by a factor of 2.5 compared with the Armington baseline case. Journal: International Economic Journal Pages: 543-558 Issue: 4 Volume: 28 Year: 2014 Month: 12 X-DOI: 10.1080/10168737.2014.907629 File-URL: http://hdl.handle.net/10.1080/10168737.2014.907629 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:4:p:543-558 Template-Type: ReDIF-Article 1.0 Author-Name: Kamel Malik Bensafta Author-X-Name-First: Kamel Malik Author-X-Name-Last: Bensafta Author-Name: Gervasio Semedo Author-X-Name-First: Gervasio Author-X-Name-Last: Semedo Title: Market Volatility Transmission and Central Banking: What Happened during the Subprime Crisis? Abstract: We examine market volatility spillover during calm and crisis periods. First, we define endogenous and exogenous market volatility: endogenous volatility refers to the early part of uncertainty in the market, while, exogenous volatility is not fully anticipated and occurs as a result of decisions taken by actors and institutions. Endogenous volatility is captured by the mean of the GARCH-type process. We compare market reaction to central banking for two states: outside the subprime crisis and during the subprime crisis. We evaluate the effectiveness of central banking during the crisis. We used a Multivariate GARCH model with structural breaks in variance. Our main findings confirm the American market's impact on European markets, and changes in cross-market spillover during the crisis. The results show the effect of communications, meeting days and policy decisions of the Fed on world markets. Journal: International Economic Journal Pages: 559-588 Issue: 4 Volume: 28 Year: 2014 Month: 12 X-DOI: 10.1080/10168737.2014.907580 File-URL: http://hdl.handle.net/10.1080/10168737.2014.907580 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:4:p:559-588 Template-Type: ReDIF-Article 1.0 Author-Name: Amr Hosny Author-X-Name-First: Amr Author-X-Name-Last: Hosny Author-Name: Magda Kandil Author-X-Name-First: Magda Author-X-Name-Last: Kandil Author-Name: Hamid Mohtadi Author-X-Name-First: Hamid Author-X-Name-Last: Mohtadi Title: What does Egypt's Revolution Reveal about its Economy? Abstract: On the third anniversary of the Egyptian revolution and against the backdrop of lingering political instability and deteriorating economic conditions, we diagnose the constraints to sectoral growth in Egypt using the 2011 Egyptian revolution as a natural experiment. We combine quantile regressions to study sector outliers with a difference in difference methodology to capture sectoral behavior before and after revolution. We find that the revolution's effect has been adverse, on average, but heterogeneous across sectors. We identify and characterize sectors most and least impacted. Results reveal that Egypt's fastest growing sectors before Revolution have been the most vulnerable after Revolution. This evidence is supported by our diagnosis approach that shows that faster growing sectors are constrained by continuous increases in prices that threaten export competitiveness (as they erode the benefits accrued to nominal depreciation of currency). Such sectors also benefited from higher monetary growth and fewer constraints on credit availability that have mitigated somewhat the speed of deterioration in the aftermath of the revolution. Our results, which hold under several robustness checks, inform policy priorities as to how to revive investors' confidence, boost competitiveness, and design priorities in industrial policy to ease structural impediments and align sectoral growth with macro priorities. Journal: International Economic Journal Pages: 589-611 Issue: 4 Volume: 28 Year: 2014 Month: 12 X-DOI: 10.1080/10168737.2014.907581 File-URL: http://hdl.handle.net/10.1080/10168737.2014.907581 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:4:p:589-611 Template-Type: ReDIF-Article 1.0 Author-Name: Jeff Luckstead Author-X-Name-First: Jeff Author-X-Name-Last: Luckstead Author-Name: Stephen Devadoss Author-X-Name-First: Stephen Author-X-Name-Last: Devadoss Author-Name: Ron C. Mittelhammer Author-X-Name-First: Ron C. Author-X-Name-Last: Mittelhammer Title: US and Chinese Strategic Trade Policies and Product Differentiation in the ASEAN Apple Market Abstract: We investigate oligopolistic competition between US and Chinese apple exporters in the ASEAN market using strategic trade theory and the NEIO literature. We also analyze competition in the US and Chinese domestic markets. The US supplies higher quality apples to ASEAN than China, resulting in product differentiation. The results show that US exporters had a higher markup than Chinese exporters through the 1990s; however, as the share of Chinese apples expanded, the US markup declined and the Chinese markup increased dramatically. Competitive pricing prevails both in the US and Chinese domestic markets. Journal: International Economic Journal Pages: 613-637 Issue: 4 Volume: 28 Year: 2014 Month: 12 X-DOI: 10.1080/10168737.2014.920894 File-URL: http://hdl.handle.net/10.1080/10168737.2014.920894 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:4:p:613-637 Template-Type: ReDIF-Article 1.0 Author-Name: Evelina Mengova Author-X-Name-First: Evelina Author-X-Name-Last: Mengova Title: Quality of Institutions and Outsourcing Abstract: This paper explores the effects of international trade and contracting on intermediate and final-goods producers' decisions regarding outsourcing of production in an environment of imperfect contract enforcement, measured by the quality of the respective legal system in each country. The efficiency versus profitability trade-off has a crucial impact on the location decisions of intermediate producers. Improving the quality of the legal system will increase the volume of outsourcing in the country with imperfect contract enforcement. Journal: International Economic Journal Pages: 639-659 Issue: 4 Volume: 28 Year: 2014 Month: 12 X-DOI: 10.1080/10168737.2014.912249 File-URL: http://hdl.handle.net/10.1080/10168737.2014.912249 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:4:p:639-659 Template-Type: ReDIF-Article 1.0 Author-Name: Alfredo M. Pereira Author-X-Name-First: Alfredo M. Author-X-Name-Last: Pereira Author-Name: Jos� M. Belbute Author-X-Name-First: Jos� M. Author-X-Name-Last: Belbute Title: Final Energy Demand in Portugal: How Persistent it is and Why it Matters for Environmental Policy Abstract: The objective of this paper is to examine the degree of persistence in final energy demand in Portugal. Our results suggest that when structural breaks are accounted for, aggregate energy demand and all of its components are stationary. Accordingly, the response to shocks is not permanent. We find, however, strong levels of persistence. Demand for electricity is the most persistent component of aggregate demand while the levels of persistence for petroleum and gas are similar and close to the aggregate level. In turn, demand for coal and biomass are also similar and the least persistent. These results have important implications for the design of macroeconomic policies. Indeed, high persistent levels mean that temporary energy shocks translate into persistent changes in energy demand and thereby in less transient shocks to the overall economy. These results are also important for the design of environmental policies. The fact that energy demand is highly persistent means that the effects of environmental policies will tend to be long lasting. Also, the relatively high persistence of electricity, gas and petroleum and the fact that their levels of persistence are similar suggests that fuel switching policies involving these fuels will be relatively easy to implement. Journal: International Economic Journal Pages: 661-677 Issue: 4 Volume: 28 Year: 2014 Month: 12 X-DOI: 10.1080/10168737.2014.920896 File-URL: http://hdl.handle.net/10.1080/10168737.2014.920896 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:4:p:661-677 Template-Type: ReDIF-Article 1.0 Author-Name: Panha Heng Author-X-Name-First: Panha Author-X-Name-Last: Heng Author-Name: Scott J. Niblock Author-X-Name-First: Scott J. Author-X-Name-Last: Niblock Title: Trading with Tigers: A Technical Analysis of Southeast Asian Stock Index Futures Abstract: Our paper examines the profitability of technical trading rules in Southeast Asian (SEA) 'tiger cub' stock index futures markets during and after the global financial crisis (GFC) of 2007/2008. Using daily closing price data from 2007 to 2012, we explore technical trading rules such as exponential moving averages (EMA (20), EMA (100), EMA (20,100)) and moving average convergence divergence (MACD) in Indonesia, Malaysia, the Philippines and Thailand. The findings reveal that after applying trading rules that account for transaction costs and risk, abnormal profits cannot be achieved above a naı¨ve 'buy-and-hold' strategy (with the exception of EMA (100) and EMA (20,100) in Indonesia, and EMA (20,100) in both the Philippines and Thailand). There appears to be some degree of success with the application of longer-term trading rules; however, unless transaction costs can be reduced, investors are best advised to pursue passive investment approaches. Despite the economic uncertainty associated with the GFC and ongoing market volatility, it appears that SEA tiger cub stock index futures markets are weak-form efficient. Journal: International Economic Journal Pages: 679-692 Issue: 4 Volume: 28 Year: 2014 Month: 12 X-DOI: 10.1080/10168737.2014.928895 File-URL: http://hdl.handle.net/10.1080/10168737.2014.928895 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:28:y:2014:i:4:p:679-692 Template-Type: ReDIF-Article 1.0 Author-Name: Simon Shui-Ming Wan Author-X-Name-First: Simon Shui-Ming Author-X-Name-Last: Wan Title: Understanding Exchange Rate Movements during the 2008 Financial Crisis Abstract: During the 2008 financial crisis, many advanced economies, whose banking systems suffered significant capital losses, experienced large and rapid exchange rate depreciations followed by prolonged and gradual appreciation in subsequent periods. In order to understand one possible explanation of these observed exchange rate movements, we develop a simple model of a highly leveraged banking sector in which banks obtain part of their funding from abroad. A fall in bank net worth leads to foreign lenders demanding a higher risk premium on credit supplied to domestic banks. This higher risk premium can be met if the exchange rate experiences an appreciation along the adjustment path, since this raises the value of the bank's earnings in terms of the foreign currency for every period that the foreign risk premium is elevated. In order for the exchange rate to appreciate by a large amount along the adjustment path, it must initially become undervalued - relative to its long-run level - so that in equilibrium the market is willing to bid up its value in subsequent periods. This thus gives rise to the large initial depreciation of the exchange rate followed by its prolonged and gradual appreciation. Journal: International Economic Journal Pages: 1-36 Issue: 1 Volume: 29 Year: 2015 Month: 3 X-DOI: 10.1080/10168737.2014.948037 File-URL: http://hdl.handle.net/10.1080/10168737.2014.948037 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:1:p:1-36 Template-Type: ReDIF-Article 1.0 Author-Name: Kwang Hwan Kim Author-X-Name-First: Kwang Hwan Author-X-Name-Last: Kim Title: Explaining the Delayed Effect of Monetary Policy: The Role of Inventories and Factor-hoarding Abstract: This paper proposes a new model accounting for the delayed effect of monetary policy shocks on output. The key feature of the model is to distinguish a variety of margins (i.e., inventory adjustments, hours per worker, efforts and employments) on which firms adjust output in response to macroeconomic shock. When these multiple margins are properly introduced to an otherwise standard modern monetary business cycles model, the interplay between inventory adjustments and the one-period lag in adjusting employment can produce the hump-shaped response of output to monetary shock. Given the weak evidence on habit formation at household level found in Dynan (2000) and Flavin and Nakagawa (2008), therefore, this paper provides an alternative explanation for the delayed effect of monetary policy without relying on the habit formation. Journal: International Economic Journal Pages: 37-55 Issue: 1 Volume: 29 Year: 2015 Month: 3 X-DOI: 10.1080/10168737.2014.928896 File-URL: http://hdl.handle.net/10.1080/10168737.2014.928896 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:1:p:37-55 Template-Type: ReDIF-Article 1.0 Author-Name: Daehoon Nahm Author-X-Name-First: Daehoon Author-X-Name-Last: Nahm Title: The Effects of New Goods and Substitution on the Korean CPI as a Measure of Cost of Living Abstract: This paper estimates upper-level substitution and new-goods bias in the Korean Consumer Price Index (CPI) from the early 1990s to the mid 2000s. It has been estimated that the upper-level substitution bias in the CPI alone increased the inflation rate by 0.51 percentage points per year over the 13-year period between 1990 and 2002. The new-goods bias further increased the inflation rate by 0.17 and 0.13 percentage points per year between 1990-1995 and 1995-2000 respectively. The Chained Laspeyres index series that is based on annually-updated weights has been found to correct less than half of the upper-level substitution bias. Journal: International Economic Journal Pages: 57-72 Issue: 1 Volume: 29 Year: 2015 Month: 3 X-DOI: 10.1080/10168737.2014.928894 File-URL: http://hdl.handle.net/10.1080/10168737.2014.928894 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:1:p:57-72 Template-Type: ReDIF-Article 1.0 Author-Name: Olfa Kaabia Author-X-Name-First: Olfa Author-X-Name-Last: Kaabia Title: Potential Contagion Effects on OECD Countries: A FAVAR Model under Bayesian Framework Abstract: This paper studies whether and how US shocks impact the OECD countries in the case of a simulated crisis. Using Bayesian estimation methods we extract constrained factors (global, country and variable type specific) from a sample of 153 economic and financial OECD variables from 1980-2008. These factors are the transmission channels through which national shocks spread to other countries, as in a pandemic. The Bayesian interpretable factors are used to estimate FAVAR models. Our main findings suggest that differences exist in the contagion effects. This implies that no generalizations can be made for OECD countries even of equal economic size and in the same geographic region. In addition, our results show that a large portion of the variance of domestic economic variables is explained by global factors; and that the interest rate shock appears to play an important role in the spillover mechanism from the United States to the rest of the world. More precisely, Australia, the United Kingdom and Scandinavian countries appear to be most sensitive to the US shocks. Journal: International Economic Journal Pages: 73-94 Issue: 1 Volume: 29 Year: 2015 Month: 3 X-DOI: 10.1080/10168737.2014.948036 File-URL: http://hdl.handle.net/10.1080/10168737.2014.948036 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:1:p:73-94 Template-Type: ReDIF-Article 1.0 Author-Name: Armando J. Garcia Pires Author-X-Name-First: Armando J. Author-X-Name-Last: Garcia Pires Title: Multinationals, R&D and Endogenous Productivity Asymmetries Abstract: We analyze the influence of endogenous productivity asymmetries between firms, in terms of competitiveness and size, on multinational activity. In the model, productivity depends on cost-reducing R&D (research and development). We show that when firms differ on commitment power in R&D, the R&D leader, independently of being a multinational or a domestic firm, tends to invest more in R&D than the R&D follower. Because of these productivity advantages, the R&D leader can more easily become multinational. Therefore, in addition to the proximity-concentration trade-off, we identify another FDI (foreign direct investment) determinant: technological competition. Journal: International Economic Journal Pages: 95-119 Issue: 1 Volume: 29 Year: 2015 Month: 3 X-DOI: 10.1080/10168737.2014.962560 File-URL: http://hdl.handle.net/10.1080/10168737.2014.962560 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:1:p:95-119 Template-Type: ReDIF-Article 1.0 Author-Name: Diego Escobari Author-X-Name-First: Diego Author-X-Name-Last: Escobari Author-Name: Diego E. Vacaflores Author-X-Name-First: Diego E. Author-X-Name-Last: Vacaflores Title: Expectations and the Dynamic Feedback between Foreign Direct Investment and Economic Growth Abstract: This paper seeks to analyze the dynamic feedback between Foreign Direct Investment (FDI) and economic growth - larger FDI promotes higher GDP, while higher GDP can be achieved with higher levels of FDI. We use panels and a sample of 19 Latin American countries to estimate a dynamic FDI and a dynamic GDP equation that jointly characterize the evolution of both variables. We find that the dynamics of GDP and FDI are mostly driven by the expectations. Shocks of GDP or FDI were found to play no role affecting the dynamics. Journal: International Economic Journal Pages: 121-136 Issue: 1 Volume: 29 Year: 2015 Month: 3 X-DOI: 10.1080/10168737.2014.966740 File-URL: http://hdl.handle.net/10.1080/10168737.2014.966740 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:1:p:121-136 Template-Type: ReDIF-Article 1.0 Author-Name: Khieu van Hoang Author-X-Name-First: Khieu Author-X-Name-Last: van Hoang Title: The Role of Monetary Policy in the New Keynesian Model: Evidence from Vietnam Abstract: This paper re-designs the New Keynesian model developed by Ireland (2004) and then uses the Vietnamese data from January 1995 to December 2012 to estimate the model's parameters. The empirical results show that the State Bank of Vietnam had been more aggressive as well as more responsive to aggregate fluctuations in the period before August 2000 than in the latter period. Thus, this change in the policy stance could be a potential reason for the declining importance of monetary policy in generating movements in output growth, inflation, interest rate, and the output gap across the subsamples. Another notable finding is the dominant role of the cost-push shock in explaining fluctuations in inflation, interest rate, and the output gap, leading to a policy implication that more attention should be devoted to developing substitute and complement industries so as to mitigate negative effects of the cost-push shocks by reducing the degree of dependence on imports. Journal: International Economic Journal Pages: 137-160 Issue: 1 Volume: 29 Year: 2015 Month: 3 X-DOI: 10.1080/10168737.2014.966741 File-URL: http://hdl.handle.net/10.1080/10168737.2014.966741 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:1:p:137-160 Template-Type: ReDIF-Article 1.0 Author-Name: Hazrul Shahiri Author-X-Name-First: Hazrul Author-X-Name-Last: Shahiri Author-Name: Zulkifly Osman Author-X-Name-First: Zulkifly Author-X-Name-Last: Osman Title: Internet Job Search and Labor Market Outcome Abstract: This study examines the effect of the use of internet job search (IJS) on individual wages. The data utilized in the study are obtained from the Internet and Computer Use Dictionary in the Current Population Survey of September 2001 and October 2003. An Oaxaca Decomposition is used to examine the extent to which wage differences are influenced by IJS. The results show that accessibility to the internet is a crucial factor in the decision of an individual to utilize the internet for job search activities. However, no clear evidence exists that IJS increases individual wages. Additionally, the study also demonstrates that IJS is subject to self-selection bias. Thus, failure to control for self-selection bias results in a very serious bias in estimation. Journal: International Economic Journal Pages: 161-173 Issue: 1 Volume: 29 Year: 2015 Month: 3 X-DOI: 10.1080/10168737.2014.966739 File-URL: http://hdl.handle.net/10.1080/10168737.2014.966739 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:1:p:161-173 Template-Type: ReDIF-Article 1.0 Author-Name: Wen Si Author-X-Name-First: Wen Author-X-Name-Last: Si Title: The Effects of Foreign Currency Derivatives on the Monetary Policy Exchange Rate Channel in China Abstract: This paper examines changes in the monetary policy exchange rate channel in the presence of foreign currency derivatives (FCD) markets in China. Initially a theoretical macroeconomics model incorporating the exchange rate risk hedging is presented, and this is followed by an empirical test. A theoretical model implies that with more firms using foreign currency derivatives to hedge the exchange rate risk, the effect of the exchange rate on the net exports will be weaker and may even be reversed. The empirical section uses Structure Vector Autoregression (SVAR) models with China's monthly macro data over the 2000-2013 period to assess the impact of the FCD market on the exchange rate channel. Empirical support for the changes in the exchange rate channel transmission is found. By impulse response function (IRF) analysis, with the emergence of the domestic FCD market in China, in the long run the probability becomes higher that the negative effect of RMB appreciation on China's net exports to the US is reversed; meanwhile the negative effects of RMB appreciation on the overall net exports and the net exports to the EU become gradually weaker on average. Journal: International Economic Journal Pages: 175-193 Issue: 2 Volume: 29 Year: 2015 Month: 6 X-DOI: 10.1080/10168737.2014.992032 File-URL: http://hdl.handle.net/10.1080/10168737.2014.992032 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:2:p:175-193 Template-Type: ReDIF-Article 1.0 Author-Name: Norbert Berthold Author-X-Name-First: Norbert Author-X-Name-Last: Berthold Author-Name: Klaus Gr�ndler Author-X-Name-First: Klaus Author-X-Name-Last: Gr�ndler Title: The Growth Crisis of Germany: A Blueprint of the Developed Economies Abstract: Germany has realized tremendous growth rates in the aftermath of the Second World War. Since the early 1970s, growth rates declined and settled down at a more or less constant rate of 2% per year, only to experience a renewed negative trend around the early 2000s. Estimating GMM growth models in a panel of 187 countries between 1970 and 2010, we illustrate that large parts of historical welfare increases have emerged due to conditional convergence, human capital accumulation, and innovation activity. Whereas conditional convergence was the main driver behind the extraordinary postwar growth rates in Germany, human capital accumulation in Germany currently lags behind the average level of most developed countries. While this may explain the moderate position of Germany in the group of the 25 richest countries, the developed countries on their part are experiencing a period of below-average GDP growth. In nearly all advanced economies, growth reveals a downward trend since the turn of the millennium. We argue that this decline must be traced back to a general lack of radically new ideas in the world economy. The explanation of the German growth crisis may thus be considered a blueprint of the situation in developed economies. Journal: International Economic Journal Pages: 195-229 Issue: 2 Volume: 29 Year: 2015 Month: 6 X-DOI: 10.1080/10168737.2015.1020322 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1020322 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:2:p:195-229 Template-Type: ReDIF-Article 1.0 Author-Name: Rishav Bista Author-X-Name-First: Rishav Author-X-Name-Last: Bista Title: Reconciling the WTO Effects on Trade at the Extensive and Intensive Margins Abstract: Empirical studies examining the impact of World Trade Organization (WTO) membership have produced disparate results. These studies, however, have focused on total aggregate trade flows. In this paper, we utilize disaggregated product level data to examine the impact of WTO membership on the product level extensive and intensive margin of imports. Utilizing the Poisson Pseudo-Maximum Likelihood (PPML) estimation that allows for heteroskedasticity in trade data and accounting for several estimation issues, we do not find a positive impact on either margins between WTO member country-pairs. Once we examine asymmetries in trade flows across countries based on their level of development, we find that developing WTO members experience an increase in the extensive margin from industrial member countries. Additionally, the industrial WTO members also experience an increase in the extensive margin from developing WTO members. Results suggest that WTO facilitates the North-South trade relationship, which has been largely absent in trade literature. Journal: International Economic Journal Pages: 231-257 Issue: 2 Volume: 29 Year: 2015 Month: 6 X-DOI: 10.1080/10168737.2015.1020622 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1020622 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:2:p:231-257 Template-Type: ReDIF-Article 1.0 Author-Name: Hyeon O. Lee Author-X-Name-First: Hyeon O. Author-X-Name-Last: Lee Author-Name: Hyun Park Author-X-Name-First: Hyun Author-X-Name-Last: Park Title: Indeterminate Balanced Growth under Habit Persistence and Fiscal Policies Abstract: This paper studies a dynamic general equilibrium model with habit persistence in preferences and fiscal policies of taxation and expenditures. Preference takes a subtractive form of habits (the marginal rate of substitution between the agent's own consumption and habit stocks is constant), and technology is linear in aggregate capital (the economy grows without a limit in the long run). We find a continuum of competitive equilibrium paths in conjunction with a unique balanced growth path in the growing economy, in which habits represent both envy/jealousy and altruism/admiration. In addition, in the social optimum under second-best fiscal policies, we show the existence of indeterminacy in transitional allocations along with a unique balanced growth path. Thus, we find that the introduction of habits influences the patterns of the transitional paths but has no impact on the balanced growth path in either competitive or social optimum allocations. The second-best fiscal policy, therefore, restores the socially optimal balanced growth rate but fails to select the unique transitional path among multiple competitive equilibrium paths in the imperfectly competitive economy. Journal: International Economic Journal Pages: 259-284 Issue: 2 Volume: 29 Year: 2015 Month: 6 X-DOI: 10.1080/10168737.2014.966738 File-URL: http://hdl.handle.net/10.1080/10168737.2014.966738 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:2:p:259-284 Template-Type: ReDIF-Article 1.0 Author-Name: Don Clark Author-X-Name-First: Don Author-X-Name-Last: Clark Author-Name: Georg Schaur Author-X-Name-First: Georg Author-X-Name-Last: Schaur Title: Has the Caribbean Basin Economic Recovery Act Achieved Its Stated Goals? Abstract: This paper examines the impact of CBERA (Caribbean Basin Economic Recovery Act) trade provisions to determine whether the program has achieved its stated goals. A major program enhancement had a negative impact across small beneficiaries, but countries with large manufacturing sectors were able to expand preferential export shares with negligible increases in total exports relative to GDP. Additional evidence supports the view that tariff preferences did not promote economic development in CBERA-eligible countries. Greater utilization of CBERA trade provisions will require expanding coverage to include all products of export interest to beneficiaries and reducing costs associated with administrative regulations and rules of origin. Journal: International Economic Journal Pages: 285-305 Issue: 2 Volume: 29 Year: 2015 Month: 6 X-DOI: 10.1080/10168737.2014.976243 File-URL: http://hdl.handle.net/10.1080/10168737.2014.976243 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:2:p:285-305 Template-Type: ReDIF-Article 1.0 Author-Name: Gihoon Hong Author-X-Name-First: Gihoon Author-X-Name-Last: Hong Title: Trade and Global Income Inequality with Frictional Labor Markets: A Lesson from the Canada-US Free Trade Agreement Abstract: This paper develops a two-country trade model with frictional labor market structures to investigate the link between increased openness to trade and cross-country income inequality. Calibrated to US-Canadian data, the model simulation results show that the Canada-US Free Trade Agreement benefited Canada, the country with relatively higher capital intensity, more due to its capacity to flexibly expand in response to an increase in product demand. The results from counterfactual experiments indicate that increased capital intensity in the US is expected to increase gains from trade in both countries while making the distribution of gains less unequal. Journal: International Economic Journal Pages: 307-326 Issue: 2 Volume: 29 Year: 2015 Month: 6 X-DOI: 10.1080/10168737.2014.976244 File-URL: http://hdl.handle.net/10.1080/10168737.2014.976244 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:2:p:307-326 Template-Type: ReDIF-Article 1.0 Author-Name: Yun Jeong Choi Author-X-Name-First: Yun Jeong Author-X-Name-Last: Choi Author-Name: Jinook Jeong Author-X-Name-First: Jinook Author-X-Name-Last: Jeong Title: Testing for the Ratchet Effect in the R&D Tax Credit Abstract: Many countries have implemented the R&D tax credit to encourage firms' R&D spending. The design of the tax credit is important for its effectiveness. Some countries such as Korea, Taiwan, Japan, France and the US have employed an incremental R&D tax credit system. The US case that made a major change in its design from the moving average base to the fixed base in calculating the credit provides us with a natural experiment to measure the effectiveness of the tax credit from the perspective of the ratchet effect. By applying an endogenous switching regression model to US manufacturing firm data, we attempt to measure the ratchet effect of R&D credit on firms' R&D investment. According to the empirical results, the R&D tax credit policy has been effective with the price elasticity, -1.818, for the qualified firms, and the re-design of R&D credit improved the positive impact of R&D credit. This provides some policy implication for those countries that adopted an incremental credit system. In addition, our result suggests the existence of selectivity bias in the previous literature. Journal: International Economic Journal Pages: 327-342 Issue: 2 Volume: 29 Year: 2015 Month: 6 X-DOI: 10.1080/10168737.2014.992033 File-URL: http://hdl.handle.net/10.1080/10168737.2014.992033 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:2:p:327-342 Template-Type: ReDIF-Article 1.0 Author-Name: Sanghack Lee Author-X-Name-First: Sanghack Author-X-Name-Last: Lee Author-Name: Shi-Young Lee Author-X-Name-First: Shi-Young Author-X-Name-Last: Lee Title: Allocation of Prizes in Contests with Size Effects Abstract: We examine the allocation of prizes in contests in which the number of contenders affects the prizes and costs. We assume that there are two groups of contenders. The government allocates a prize to the two groups, and the contenders in each group respectively compete for the prize. Examining the prize allocation in such contests, we obtain the following results. The aggregate effort increases in the prize share of the larger group. In contests with size effects through costs, the aggregate resource expended in the contests and the aggregate payoffs are independent of group size distribution if the prize is allocated in proportion to group size. The integration of contests with size effects through prizes can yield higher aggregate effort and payoffs than the decentralized contests. Journal: International Economic Journal Pages: 343-358 Issue: 2 Volume: 29 Year: 2015 Month: 6 X-DOI: 10.1080/10168737.2014.992034 File-URL: http://hdl.handle.net/10.1080/10168737.2014.992034 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:2:p:343-358 Template-Type: ReDIF-Article 1.0 Author-Name: Eiji Yamamura Author-X-Name-First: Eiji Author-X-Name-Last: Yamamura Title: The Impact of Natural Disasters on Income Inequality: Analysis using Panel Data during the Period 1970 to 2004 Abstract: Although natural disasters have been found to influence economic growth, their impact on income inequality has not yet been explored. This paper uses cross-country panel data during the period 1965 to 2004 to examine how the occurrence of natural disasters has affected income inequality. The major findings of this study are that although natural disasters have increased income inequality in the short (5 years) term, this effect disappears in the long term (10 years). These findings are observed even after the fixed effects of year and country are controlled for. Journal: International Economic Journal Pages: 359-374 Issue: 3 Volume: 29 Year: 2015 Month: 9 X-DOI: 10.1080/10168737.2015.1020323 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1020323 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:3:p:359-374 Template-Type: ReDIF-Article 1.0 Author-Name: Jian Zhang Author-X-Name-First: Jian Author-X-Name-Last: Zhang Author-Name: Thomas Ward Author-X-Name-First: Thomas Author-X-Name-Last: Ward Title: Assessing the Impacts of Capital Inflows on Domestic Economy across the Sub-Saharan Africa Countries Abstract: Using GMM models, this paper analyzes the impacts of capital inflows on domestic investment in 44 Sub-Saharan Africa (SSA) countries from 2003-2012. It is found that foreign direct investment across the SSA remains to be the largest percentage share, accounting for 35% of the total capital inflows. FDI inflows have significant positive impacts on domestic investment across the SSA in both short term and long term. Other key macroeconomic factors such as age dependency ratio, domestic economic growth, terms of trade, real effective exchange rate and trade openness also play vital roles in determining domestic investment. Journal: International Economic Journal Pages: 375-397 Issue: 3 Volume: 29 Year: 2015 Month: 9 X-DOI: 10.1080/10168737.2015.1020325 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1020325 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:3:p:375-397 Template-Type: ReDIF-Article 1.0 Author-Name: Meriem Bouchoucha Author-X-Name-First: Meriem Author-X-Name-Last: Bouchoucha Title: The Euro Effect on Eurozone Exports Abstract: In this article, we examine the impact of the real effective exchange rate for several countries in the Euro area over the period before and after the introduction of the euro. Based on ARDL modeling techniques, we estimate the long-run and short-run relationships between exports volumes and a number of key variables, namely Real Effective Exchange Rate, weighted GDP and Output Gap. This article is particularly oriented towards the study of long-term relationships between the exchange rate and global exports performance, on the one hand; and between exchange rates and intra-European exports performance, on the other. Two measures of exchange rate are considered: a global real exchange rate to investigate the impact of exchange rates on overall exports and an intra European real exchange rate calculated to detect its effect on intra-European trade. The study shows that there is a big difference between the impact of exchange rates on exports before and after the establishment of the European Monetary Union on the one hand, and between the impacts of exchange rates on intra-European global exports on the other hand. Journal: International Economic Journal Pages: 399-418 Issue: 3 Volume: 29 Year: 2015 Month: 9 X-DOI: 10.1080/10168737.2015.1020324 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1020324 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:3:p:399-418 Template-Type: ReDIF-Article 1.0 Author-Name: Jiyoung Lee Author-X-Name-First: Jiyoung Author-X-Name-Last: Lee Title: Disentangling the Predictive Power of Term Spreads under Inflation Targeting Abstract: Under inflation targeting, S. Cho and J. Lee (2014, Inflation targeting and predictive power of term spreads. Seoul Journal of Economics, 27, 391-419), A. Estrella (2005, Why does the yield curve predict output and inflation? The Economic Journal, 115, 722-744) and P.L. Siklos (2000, Inflation targets and the yield curve: New Zealand and Australia versus the US. International Journal of Finance & Economics, 5, 15-32) have reported that the predictive power of yield spreads for future inflation decreases in inflation targeting countries. In this paper, we decompose the yield spread into the expectations hypothesis component and the term premium, and find that the decrease in the predictability is mostly due to the deterioration of information embedded in the expectations hypothesis component. Our finding reveals that if inflation targeting is successful in achieving its main goal, then the expectations for future inflation are anchored at the target inflation rate (or range), and thereby the predictive contents of the term spreads regarding future inflation decrease. Journal: International Economic Journal Pages: 419-450 Issue: 3 Volume: 29 Year: 2015 Month: 9 X-DOI: 10.1080/10168737.2015.1020326 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1020326 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:3:p:419-450 Template-Type: ReDIF-Article 1.0 Author-Name: Naoto Jinji Author-X-Name-First: Naoto Author-X-Name-Last: Jinji Author-Name: Xingyuan Zhang Author-X-Name-First: Xingyuan Author-X-Name-Last: Zhang Title: International Knowledge Flows and Productivity: Intra- vs. Inter-Industry Spillovers Abstract: The effects of international knowledge spillovers on total factor productivity (TFP) at the industry level are examined by using a panel of 13 manufacturing industries across 15 OECD countries over 23 years. We distinguish between intra- and inter-industry spillovers from the information on patent applications and citations. Patent data are taken from the Japan Patent Office and the United States Patent and Trademark Office. Using four alternative spatial panel estimation techniques, we find that international knowledge spillovers within the same industry significantly contribute to sectoral TFP. In contrast, there is little evidence of a positive effect of international knowledge spillovers on TFP across industries. Journal: International Economic Journal Pages: 451-474 Issue: 3 Volume: 29 Year: 2015 Month: 9 X-DOI: 10.1080/10168737.2015.1041543 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1041543 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:3:p:451-474 Template-Type: ReDIF-Article 1.0 Author-Name: Derek Kellenberg Author-X-Name-First: Derek Author-X-Name-Last: Kellenberg Title: Infrastructure, Multinational Affiliate Production, and the Pattern of Trade Abstract: In a two-country general equilibrium model with endogenously determined domestic and multinational firms, it is shown that public infrastructure development can have diverging implications for horizontal multinational affiliate firm production and trade, depending on the type of infrastructure invested in. Infrastructure investments with strong productive or local transport effects (i.e. schools or local roads) lead to greater domestic firm production and exports, fewer imports, and more foreign multinational affiliate firm production in the country making the investment. On the other hand, infrastructure projects that lower international trade and transaction costs (i.e. shipping ports or airports) lead to more domestic firms in both countries, a greater volume of bilateral exports in both directions, and less multinational affiliate production. Further, the effect of different types of infrastructure investment on income and welfare of the open economies is explored. Journal: International Economic Journal Pages: 475-502 Issue: 3 Volume: 29 Year: 2015 Month: 9 X-DOI: 10.1080/10168737.2015.1041542 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1041542 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:3:p:475-502 Template-Type: ReDIF-Article 1.0 Author-Name: Nuri Yildirim Author-X-Name-First: Nuri Author-X-Name-Last: Yildirim Title: Not Leverage but Change in Leverage Matters for Firms' Future Growth: Evidence from Turkey's Top 1000 Abstract: In the financial literature it is generally assumed that a firm's financial leverage is a good measure (proxy) of the firm's access to financing. In this study, it is argued that it is not the firm's debt (leverage), but the change in leverage that more accurately mirrors the firm's true likelihood to have access to external sources of financing. Applying a firm-type analysis and panel data techniques to data on the top 1000 private industrial companies of Turkey for the period 1997-2012, it is shown that it is the change in leverage ratio, not the level of leverage ratio itself that matters for the future firm growth, controlling for profitability, leverage and firm size. Journal: International Economic Journal Pages: 503-525 Issue: 3 Volume: 29 Year: 2015 Month: 9 X-DOI: 10.1080/10168737.2015.1065429 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1065429 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:3:p:503-525 Template-Type: ReDIF-Article 1.0 Author-Name: Maria Berrittella Author-X-Name-First: Maria Author-X-Name-Last: Berrittella Title: The Effect of Public Education Expenditure on Shadow Economy: A Cross-Country Analysis Abstract: This paper empirically examines whether devoting more resources to education can reduce the size of the shadow economy on a cross-section of countries. The findings show a negative relationship between public education expenditure and the size of the shadow economy, which is robust to the inclusion of different proxies for the control variables, a large set of policy variables, regional differences and endogeneity. The findings also emphasize the role of education, suggesting that public policies devoted to higher education level imply a decreasing effect on the shadow economy. Journal: International Economic Journal Pages: 527-546 Issue: 4 Volume: 29 Year: 2015 Month: 12 X-DOI: 10.1080/10168737.2015.1081259 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1081259 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:4:p:527-546 Template-Type: ReDIF-Article 1.0 Author-Name: Kwame Osei-Assibey Author-X-Name-First: Kwame Author-X-Name-Last: Osei-Assibey Title: Empirical Regularities of Financial Market Volatility and Good Modelling Process: Developing Countries' Exchange Rate Markets Perspective Abstract: A survey of contemporary literature suggests that empirical studies on developing economies are few or almost non-existent. Engle and Patton (2001, What good is a volatility model. Quantitative Finance, 1, 237-245) as well as Poon (2005, A Practical Guide to Forecasting Financial Market Volatility. New Jersey: Wiley.) suggest that a good volatility model is one that utilizes the empirical regularities of financial market volatility (of which most were observed on industrialized economies markets). This paper uses exchange rate series from Ghana, Mozambique and Tanzania to show that; they are not different from other financial markets as they exhibit most of the empirical regularities including volatility sign asymmetry, non-normal distribution and volatility clustering. It is however observed that the three exchange rate series are very volatile, with induced volatile shocks highly persistent and asymmetric, and extreme prices commonplace;the ARCH technique (which has been well documented to capture these empirical regularities and produce good forecasts) generally produced a good fit to the three exchange rate series when compared with volatility forecasts generated using the EWMA technique. In the simple analysis of a day-ahead volatility forecast abilities of estimated models, it was observed that best fit does not necessarily ensure best forecast. Journal: International Economic Journal Pages: 547-570 Issue: 4 Volume: 29 Year: 2015 Month: 12 X-DOI: 10.1080/10168737.2015.1081258 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1081258 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:4:p:547-570 Template-Type: ReDIF-Article 1.0 Author-Name: Manouchehr Mokhtari Author-X-Name-First: Manouchehr Author-X-Name-Last: Mokhtari Author-Name: Doha Abdelhamid Author-X-Name-First: Doha Author-X-Name-Last: Abdelhamid Author-Name: Mamak Ashtari Author-X-Name-First: Mamak Author-X-Name-Last: Ashtari Author-Name: Edmond D. Shenassa Author-X-Name-First: Edmond D. Author-X-Name-Last: Shenassa Title: Do Competing Health Insurance Licensors Provide Pro-patient Effects? Abstract: This paper shows that competition among health insurance licensors has strong pro-patient effects, if inter-regulatory competition is allowed. The pro-patient effects of the competition among health insurance licensors do not depend on the need for the patients to form or exercise their political influence, such as, forming cooperatives or voting, as suggested by Backer's pressure group theory. When inter-jurisdictional transactions are allowed, endogenous policy making ensures that the health care licensors pursue public interests at no costs to patients. Journal: International Economic Journal Pages: 571-596 Issue: 4 Volume: 29 Year: 2015 Month: 12 X-DOI: 10.1080/10168737.2015.1081261 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1081261 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:4:p:571-596 Template-Type: ReDIF-Article 1.0 Author-Name: Paulo Ferreira Author-X-Name-First: Paulo Author-X-Name-Last: Ferreira Author-Name: Andreia Dionisio Author-X-Name-First: Andreia Author-X-Name-Last: Dionisio Title: Revisiting Covered Interest Parity in the European Union: the DCCA Approach Abstract: This paper analyzes the evidence of financial integration, with covered interest parity (CIP), for a group of countries that have already adopted the euro and another group of countries that kept their currencies. We use detrended cross-correlation analysis, which allows analyzing the behavior of time series even when they are not stationary. The main results indicate that countries that adopted the euro do not show much evidence in favor of CIP, before joining the Eurozone, which could imply they will not benefit from all common currency advantages. In the group of countries that did not adopt the euro, Denmark, Sweden, the UK and the Czech Republic are the ones presenting better conditions for financial integration with the euro, while Bulgaria has also some evidence of this. Some possible explanations of CIP deviations are agents not considering all countries' assets as similar and also the underdevelopment of markets and liquidity problems (more pronounced due to periods of turmoil). Journal: International Economic Journal Pages: 597-615 Issue: 4 Volume: 29 Year: 2015 Month: 12 X-DOI: 10.1080/10168737.2015.1081260 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1081260 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:4:p:597-615 Template-Type: ReDIF-Article 1.0 Author-Name: Sakiru Solarin Author-X-Name-First: Sakiru Author-X-Name-Last: Solarin Author-Name: Emmanuel Anoruo Author-X-Name-First: Emmanuel Author-X-Name-Last: Anoruo Title: Nonlinearity and the Unit Root Hypothesis for African Per Capita Real GDP Abstract: Once described as an epic center of growth tragedy, African nations have lately achieved relatively rapid growth rates, which have raised hopes that the continent is finally on the path to economic convergence with other emerging economies. However, there is a need to establish whether stabilization policies for the purpose of enhancing the GDP are effective in African countries. One of the means of examining the effectiveness of these policies is through the investigation of the unit root properties of per capita GDP in the continent. This study aims to add to the existing papers on GDP in African countries by investigating the non-stationarity of per capita GDP in 52 African countries, while using a newly proposed nonlinear unit root test. The results suggest that per capita GDP follows the non-stationarity process in half of the entire sample. Journal: International Economic Journal Pages: 617-630 Issue: 4 Volume: 29 Year: 2015 Month: 12 X-DOI: 10.1080/10168737.2015.1081615 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1081615 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:4:p:617-630 Template-Type: ReDIF-Article 1.0 Author-Name: Yu Chen Author-X-Name-First: Yu Author-X-Name-Last: Chen Author-Name: Yufei Wang Author-X-Name-First: Yufei Author-X-Name-Last: Wang Title: The Efficiency of China's Banking Industry and the Determinants Abstract: The recent global financial crisis highlights the importance of a sound financial sector for economic development. This paper evaluates the economic efficiency of China's banking industry and investigates the determinants of this efficiency. Our analysis shows that the average economic efficiency of joint-stock commercial banks is highest, followed by the 'Big Four' state-owned commercial banks and city commercial banks. The economic inefficiency of these banks during the past 15 years was mainly caused by technical inefficiency, and this technical inefficiency was mainly caused by scale inefficiency. Using the scores of efficiency as dependent variables, the paper also comprehensively studies the impact of (1) the characteristics of individual banks, (2) the characteristics of the whole banking industry and (3) macroeconomic factors on banking efficiency. The results suggest a number of factors that banks can work on to improve efficiency and lend support to deepening reforms in the Chinese banking industry, including regulatory reforms that require capital adequacy in a more strict way, reforms that introduce more competition and, more broadly, reforms that aim at establishing institutions that can truly commercialize Chinese banks. Last but not least, the efficiency of banking depends on healthy growth of the overall economy. Journal: International Economic Journal Pages: 631-653 Issue: 4 Volume: 29 Year: 2015 Month: 12 X-DOI: 10.1080/10168737.2015.1095217 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1095217 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:4:p:631-653 Template-Type: ReDIF-Article 1.0 Author-Name: Korbinian Nagel Author-X-Name-First: Korbinian Author-X-Name-Last: Nagel Author-Name: Dierk Herzer Author-X-Name-First: Dierk Author-X-Name-Last: Herzer Author-Name: Peter Nunnenkamp Author-X-Name-First: Peter Author-X-Name-Last: Nunnenkamp Title: How Does FDI Affect Health? Abstract: This paper investigates the impact of foreign direct investment (FDI) on population health using panel data for up to 179 countries for the period between 1980 and 2011. Our main finding is that the relationship between FDI and health is nonlinear, depending on the level of income: FDI has a positive effect on health at low levels of income, but the effect decreases with increasing income, then changes sign and becomes increasingly negative at higher levels of income. Journal: International Economic Journal Pages: 655-679 Issue: 4 Volume: 29 Year: 2015 Month: 12 X-DOI: 10.1080/10168737.2015.1103772 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1103772 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:4:p:655-679 Template-Type: ReDIF-Article 1.0 Author-Name: Biswajit Mandal Author-X-Name-First: Biswajit Author-X-Name-Last: Mandal Author-Name: Arindam Mandal Author-X-Name-First: Arindam Author-X-Name-Last: Mandal Title: A Note on How and Why Growth and Unemployment Go Hand in Hand in Developing Economies Abstract: This paper develops a simple model to explain the phenomenon of persistent unemployment, even in an economy experiencing high output growth. In the model, unemployment grows at a rate identical with the growth rate of input factors and sectors. The result is primarily triggered by a pre-fixed minimum wage for unskilled workers. To corroborate our claim, we have empirically tested our model hypothesis using data for 12 developing countries and found empirical results consistent with the theory. To mitigate or reduce unemployment, history becomes crucial in deciding on the desired rate of growth in different sectors. Journal: International Economic Journal Pages: 681-693 Issue: 4 Volume: 29 Year: 2015 Month: 12 X-DOI: 10.1080/10168737.2015.1025806 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1025806 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:29:y:2015:i:4:p:681-693 Template-Type: ReDIF-Article 1.0 Author-Name: Bernard C. Beaudreau Author-X-Name-First: Bernard C. Author-X-Name-Last: Beaudreau Title: Competitive and Comparative Advantage: Towards a Unified Theory of International Trade Abstract: The field of international business/economics is largely dualistic in nature. On one hand is the economics literature which has, for two centuries, focused on the notion of comparative advantage (technology, factor proportions) while on the other is the business literature which has recently developed the concept of competitive advantage. This paper presents a reconciliation of the two based on global value chain/supply chain analysis and the concept of vertical comparative advantage. It is shown that the theory of competitive advantage's epistemological comparative advantage lies with its ‘how to’ approach to developing an advantage, while the theory of comparative advantage's epistemological comparative advantage lies with its account of ‘what is’ and that both are complementary. However, it is also argued that the failure to recognize this complementarity as well as the shortcomings of each have prevented and continue to prevent the emergence of an integrated, empirically-consistent theory of international trade -- in short, prevented us from taking advantage of the gains from epistemological trade. Journal: International Economic Journal Pages: 1-18 Issue: 1 Volume: 30 Year: 2016 Month: 3 X-DOI: 10.1080/10168737.2015.1136664 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1136664 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:1:p:1-18 Template-Type: ReDIF-Article 1.0 Author-Name: Hasan A. Faruq Author-X-Name-First: Hasan A. Author-X-Name-Last: Faruq Author-Name: Michael A. Webb Author-X-Name-First: Michael A. Author-X-Name-Last: Webb Title: Does Culture Drive Innovation and Export Quality? Abstract: Quality upgrading is important for two reasons: it helps us understand the determinants of trade flows between countries and it promotes economic development. We study the cultural determinants of export quality using Hofstede's four original cultural dimensions to provide hypotheses on R&D spending, patents per capita and export quality. We then employ three-stage least squares analysis and confirm our hypotheses. For example, we find uncertainty avoidance encourages small-scale continuous improvement initiatives and substantially increases export quality. Power distance and individualism increase export quality, while masculinity has a small impact on quality. Finally, we provide implications for understanding the direction of trade and developing policy. Journal: International Economic Journal Pages: 19-38 Issue: 1 Volume: 30 Year: 2016 Month: 3 X-DOI: 10.1080/10168737.2015.1136667 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1136667 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:1:p:19-38 Template-Type: ReDIF-Article 1.0 Author-Name: Meriam BouAli Author-X-Name-First: Meriam Author-X-Name-Last: BouAli Author-Name: Adnen Ben Nasr Author-X-Name-First: Adnen Author-X-Name-Last: Ben Nasr Author-Name: Abdelwahed Trabelsi Author-X-Name-First: Abdelwahed Author-X-Name-Last: Trabelsi Title: A Nonlinear Approach for Modeling and Forecasting US Business Cycles Abstract: The purpose of this paper is to provide a complete evaluation of four regime-switching models by checking their performance in detecting US business cycle turning points, in replicating US business cycle features and in forecasting US GDP growth rate. Both individual and combined forecasts are considered. Results indicate that while the Markov-switching model succeeded in replicating all the NBER peak and trough dates without an extra-cycle detection, it seems to be outperformed by the Bounce-back model in term of the delay time to a correct alarm. Concerning business cycle features characterization, none of the competing models dominates over all the features. The performance of the Markov-switching and bounce back models in detecting turning points was not translated into an improved business cycle feature characterization since they are outperformed by the Floor and Ceiling model. The forecast performance of the considered models varies across regimes and across forecast horizons. That is, the model performing best in an expansion period is not necessarily the same in a recession period and similarly for the forecast horizons. Finally, combining such individual forecasts generally leads to increased forecast accuracy especially for h=1. Journal: International Economic Journal Pages: 39-74 Issue: 1 Volume: 30 Year: 2016 Month: 3 X-DOI: 10.1080/10168737.2010.547945 File-URL: http://hdl.handle.net/10.1080/10168737.2010.547945 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:1:p:39-74 Template-Type: ReDIF-Article 1.0 Author-Name: Isabelle Terraz Author-X-Name-First: Isabelle Author-X-Name-Last: Terraz Title: Economic Growth: The Case of Irreversibility of Investment with Bargaining Power of Workers Abstract: In this paper, we develop a model of endogenous growth with search frictions in the labor market. We show that the growth rate of the economy may be durably altered in a case of investment irreversibility and bargaining power of workers. Labor market conditions mitigate this rent-seeking effect of workers. Journal: International Economic Journal Pages: 75-86 Issue: 1 Volume: 30 Year: 2016 Month: 3 X-DOI: 10.1080/10168737.2015.1136665 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1136665 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:1:p:75-86 Template-Type: ReDIF-Article 1.0 Author-Name: Mark David Witte Author-X-Name-First: Mark David Author-X-Name-Last: Witte Author-Name: Luigi Ventura Author-X-Name-First: Luigi Author-X-Name-Last: Ventura Title: An empirical examination of the currency denomination of trade Abstract: The currency denomination of trade has important effects on inflation and the macroeconomic transmission of shocks. This study examines the currency denomination of Italian exports and imports with countries outside the European Union during 2010. By using a unique dataset we find evidence to suggest that invoicing currencies do not always have consistent determinants. Significant effects, new to the literature, include the massive, robust effect of geography and tax treaties, which suggest the importance of information asymmetry. The distance between trading partners has one of the largest marginal effects, increasing the likelihood of vehicle currency use relative to the euro. Journal: International Economic Journal Pages: 87-107 Issue: 1 Volume: 30 Year: 2016 Month: 3 X-DOI: 10.1080/10168737.2015.1103771 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1103771 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:1:p:87-107 Template-Type: ReDIF-Article 1.0 Author-Name: Tsung-Pao Wu Author-X-Name-First: Tsung-Pao Author-X-Name-Last: Wu Author-Name: Shu-Bing Liu Author-X-Name-First: Shu-Bing Author-X-Name-Last: Liu Author-Name: Shun-Jen Hsueh Author-X-Name-First: Shun-Jen Author-X-Name-Last: Hsueh Title: The Causal Relationship between Economic Policy Uncertainty and Stock Market: A Panel Data Analysis Abstract: This study applies recently developed bootstrap panel Granger causality, proposed by Kónya, to investigate a causal link between economic policy uncertainty and stock markets in nine countries over monthly periods from 2003M01 to 2014M12 (Kónya (2006) Exports and growth: Granger causality analysis on OECD countries with a panel data approach. Economic Modelling, 23, 978--992). The modeling allows us to examine both the cross-sectional dependency and the country-specific heterogeneity. The empirical results indicate that not all countries are alike, and that the theoretical prediction that stock markets fall at the announcement of a policy change is not always supported. Specifically, this work finds evidence of the stock market leading hypothesis for India, Italy, and Spain, while the economic policy uncertainty leading hypothesis cannot be rejected for the United Kingdom. In addition, the neutrality hypothesis was supported in the remaining countries (Canada, China, France, Germany and the United States), while the feedback hypothesis, however, is not found. The findings of this study could provide important policy implications for these nine countries. Journal: International Economic Journal Pages: 109-122 Issue: 1 Volume: 30 Year: 2016 Month: 3 X-DOI: 10.1080/10168737.2015.1136668 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1136668 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:1:p:109-122 Template-Type: ReDIF-Article 1.0 Author-Name: Maman Setiawan Author-X-Name-First: Maman Author-X-Name-Last: Setiawan Author-Name: Nury Effendi Author-X-Name-First: Nury Author-X-Name-Last: Effendi Title: Survey of the Industrial Concentration and Price-cost Margin of the Indonesian Manufacturing Industry Abstract: This research investigates trends and conditional convergence of industrial concentration and price-cost margin in 410 subsectors of the Indonesian manufacturing industry. This study uses firm (establishment) level survey data provided by the Indonesian Bureau of Central Statistics (BPS) in the period 1980--2011. The conditional convergence model is employed using four-year intervals. This research finds that the industrial concentration and price-cost margin are relatively high for most of the subsectors. Moreover, the Indonesian manufacturing industry is classified as a tight oligopoly structure. This research also reveals that the industrial concentration and price-cost margin for all subsectors tend to converge to the same value in the long run. The competition law supports the convergence of the industrial concentration and price-cost margin for the subsectors. This research concludes that the higher industrial concentration can create a higher market power in the industry. Journal: International Economic Journal Pages: 123-146 Issue: 1 Volume: 30 Year: 2016 Month: 3 X-DOI: 10.1080/10168737.2015.1136666 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1136666 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:1:p:123-146 Template-Type: ReDIF-Article 1.0 Author-Name: Vincent Fromentin Author-X-Name-First: Vincent Author-X-Name-Last: Fromentin Title: The Global Economic Crisis and Migrant Workers: The Case of the Construction Sector in Europe Abstract: This paper examines the employment response of native and migrant workers over the business cycle in the construction sectors of European countries between 2008 and 2011. Using a dynamic model (Generalized Method of Moments), which accounts for ‘intergroup substitutability’, we observe that differences in the cyclical employment patterns of migrants and natives in the construction sector may be due to a potential selection of EU and non-EU migrants who are disproportionately prone to cyclical fluctuations in temporary jobs or a higher turnover rate. Journal: International Economic Journal Pages: 147-163 Issue: 1 Volume: 30 Year: 2016 Month: 3 X-DOI: 10.1080/10168737.2014.894550 File-URL: http://hdl.handle.net/10.1080/10168737.2014.894550 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:1:p:147-163 Template-Type: ReDIF-Article 1.0 Author-Name: Tomoo Kikuchi Author-X-Name-First: Tomoo Author-X-Name-Last: Kikuchi Title: Introduction: Evolving Finance, Trade and Investment in Asia Journal: International Economic Journal Pages: 165-168 Issue: 2 Volume: 30 Year: 2016 Month: 6 X-DOI: 10.1080/10168737.2016.1148433 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1148433 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:2:p:165-168 Template-Type: ReDIF-Article 1.0 Author-Name: Ayako Obashi Author-X-Name-First: Ayako Author-X-Name-Last: Obashi Author-Name: Fukunari Kimura Author-X-Name-First: Fukunari Author-X-Name-Last: Kimura Title: The Role of China, Japan, and Korea in Machinery Production Networks Abstract: China, Japan, and Korea have been the three largest players in East Asian machinery production networks. This paper employs a new method of analyzing finely disaggregated international trade data that applies the concept of zero trade flows, least-traded goods, and intensive/extensive margins of trade growth and scrutinizes changes in the role of China, Japan, and Korea in machinery production networks between 2007 and 2013. We find, first, that China became a dominant player in the global machinery production networks in terms of both export values and the diversity and density of product-destination pairs. Second, the growth of Korea as machinery parts and components suppliers was also salient while Korea's dependency on China was sharply enhanced. Third, Japan kept being stagnated, and the machinery production links between Korea and Japan were substantially weakened. Journal: International Economic Journal Pages: 169-190 Issue: 2 Volume: 30 Year: 2016 Month: 6 X-DOI: 10.1080/10168737.2016.1148398 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1148398 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:2:p:169-190 Template-Type: ReDIF-Article 1.0 Author-Name: Yuqing Xing Author-X-Name-First: Yuqing Author-X-Name-Last: Xing Title: Global Value Chains and China's Exports to High-income Countries Abstract: This paper argues that global value chains (GVCs) have functioned as a vehicle for ‘Made in China’ products to enter international markets, especially markets of high-income countries. The analysis of the paper focuses on China's processing exports, a subset of GVC activities. It demonstrates that, by participating in GVCs Chinese firms bundle processing exports with advanced technologies and globally recognized brands of lead firms, and then sell them to consumers of international markets through distribution networks of GVCs. Using panel data of bilateral processing exports covering more than 100 of China's trade partners, the paper shows empirically there exists a significantly positive correlation between the share of processing exports and the income of trading partners, implying that processing trade is an effective means for ‘Made in China’ products to enter high-income countries. The cross-country heterogeneity of processing exports also indicates China captures relatively more value added in its exports to low-income countries than to high-income countries. Journal: International Economic Journal Pages: 191-203 Issue: 2 Volume: 30 Year: 2016 Month: 6 X-DOI: 10.1080/10168737.2016.1148403 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1148403 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:2:p:191-203 Template-Type: ReDIF-Article 1.0 Author-Name: Kevin C. Cheng Author-X-Name-First: Kevin C. Author-X-Name-Last: Cheng Author-Name: Gee Hee Hong Author-X-Name-First: Gee Hee Author-X-Name-Last: Hong Author-Name: Dulani Seneviratne Author-X-Name-First: Dulani Author-X-Name-Last: Seneviratne Author-Name: Rachel van Elkan Author-X-Name-First: Rachel Author-X-Name-Last: van Elkan Title: Rethinking the Exchange Rate Impact on Trade in a World with Global Value Chains Abstract: Global value chains (GVCs) are a prominent feature of global production and trading systems. Using the OECD-WTO database on trade in value added, this paper examines the exchange rate elasticities of GVC-related exports and imports and compares them with elasticities for trade in traditonal goods. We find that a real depreciation raises both the foreign and domestic value-added content of GVC-related exports. The size of these elasticities is found to be smaller when the import content of GVC exports is larger. Among the key policy implications of these results is that exchange rate changes by small contributors of value added have little effect on their own production or the production of their supply chain partners. On the other hand, large contributors to the value-added of the final product create spillovers to their smaller supply chain partners, obviating traditional beggar-thy-neighbor concerns. Journal: International Economic Journal Pages: 204-216 Issue: 2 Volume: 30 Year: 2016 Month: 6 X-DOI: 10.1080/10168737.2016.1148418 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1148418 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:2:p:204-216 Template-Type: ReDIF-Article 1.0 Author-Name: Willem Thorbecke Author-X-Name-First: Willem Author-X-Name-Last: Thorbecke Title: Exchange Rates and Production Networks in Asia: A Twenty-first Century Perspective Abstract: China's surplus in processing trade, correctly measured, approaches half a trillion dollars year after year. Processed exports are final goods produced using parts and components imported from East Asia. Cointegration evidence indicates that processed exports depend, not only on the renminbi exchange rate, but also on exchange rates in East Asian supply chain countries. Results from out-of-sample forecasts indicate that exchange rates in supply chain countries remain important for explaining processed exports over the 2013--2015 period even as China's value-added has increased. While the renminbi has appreciated by 50% between 2005 and 2015, exchange rates in South Korea, Taiwan, and Japan have depreciated or stayed the same during this period, despite large current account surpluses. In order to switch expenditures away from China's processed exports and rebalance trade, it is necessary for exchange rates in Asian supply chain countries to also appreciate. Journal: International Economic Journal Pages: 217-230 Issue: 2 Volume: 30 Year: 2016 Month: 6 X-DOI: 10.1080/10168737.2016.1148420 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1148420 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:2:p:217-230 Template-Type: ReDIF-Article 1.0 Author-Name: Shujiro Urata Author-X-Name-First: Shujiro Author-X-Name-Last: Urata Title: Mega-FTAs and the WTO: Competing or Complementary? Abstract: Mega-FTAs involving many countries and encompassing bilateral and mini-lateral FTAs have begun to be negotiated, while the Doha Round of multinational trade negotiations under the WTO have been at a stalemate. Mega-FTAs, which are discriminatory, and the WTO, which is non-discriminatory, are not consistent, thereby leading to a view that they are competing. This article argues that mega-FTAs and the WTO can be complementary, as mega-FTAs could facilitate negotiations with a smaller number of negotiating members. It further stresses the importance of extending mega-FTAs to a global level by merging with other mega-FTAs and by accepting new members. Journal: International Economic Journal Pages: 231-242 Issue: 2 Volume: 30 Year: 2016 Month: 6 X-DOI: 10.1080/10168737.2016.1148422 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1148422 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:2:p:231-242 Template-Type: ReDIF-Article 1.0 Author-Name: Linh Bun Author-X-Name-First: Linh Author-X-Name-Last: Bun Author-Name: Nirvikar Singh Author-X-Name-First: Nirvikar Author-X-Name-Last: Singh Title: Heterogeneous Patterns of Financial Development: Implications for Asian Financial Integration Abstract: This paper analyzes detailed differences in patterns of financial development across the major Asian economies, including three of the region's largest economies (China, Japan and South Korea), to understand how these differences might affect possibilities for greater regional financial integration. In particular, the paper argues that heterogeneous patterns of financial development, and not just differences in levels of financial development, may present an economic challenge to regional financial integration efforts, aside from possible political challenges. The paper provides background on the case for financial openness, Asian experiences with financial integration, and regional economic responses to external shocks. It also discusses policy options, including regulatory reform and coordination, and possible risk management policies and institutions, in the context of heterogeneous patterns of financial development. Journal: International Economic Journal Pages: 243-271 Issue: 2 Volume: 30 Year: 2016 Month: 6 X-DOI: 10.1080/10168737.2016.1148424 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1148424 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:2:p:243-271 Template-Type: ReDIF-Article 1.0 Author-Name: Ulrich Volz Author-X-Name-First: Ulrich Author-X-Name-Last: Volz Title: Regional Financial Integration in East Asia against the Backdrop of Recent European Experiences Abstract: This article discusses recent trends in regional financial integration in East Asia and the current efforts of the Association of Southeast Asian Nations (ASEAN) member countries to foster regional financial integration against the backdrop of three decades of experience with financial integration in Europe. It reviews the two major crisis episodes of the recent European financial history to illustrate the risks associated with comprehensive capital account liberalisation and financial integration without commensurate supervisory structures. The article highlights the importance of targeted macroprudential policies and the development of an adequate region-wide regulatory and supervisory framework to reduce the risks associated with regional -- and hence international -- financial integration. Journal: International Economic Journal Pages: 272-293 Issue: 2 Volume: 30 Year: 2016 Month: 6 X-DOI: 10.1080/10168737.2016.1148426 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1148426 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:2:p:272-293 Template-Type: ReDIF-Article 1.0 Author-Name: Alice Y. Ouyang Author-X-Name-First: Alice Y. Author-X-Name-Last: Ouyang Author-Name: Ramkishen S. Rajan Author-X-Name-First: Ramkishen S. Author-X-Name-Last: Rajan Title: Does Inflation Targeting in Asia Reduce Exchange Rate Volatility? Abstract: Inflation targeting has become a popular option among many developing economies, including those in Asia. Despite a gradual move towards inflation targeting, many Asian economies remain concerned about exchange rate variability. Motivated by this, this paper is interested in the impact of inflation targeting on real exchange rate volatility in the Asian economies. In particular, using a panel of developing countries that includes many from Asia for the period 2007--2012, the paper explores the impact of inflation targeting on real exchange rate volatility as well as in terms of its two component parts, i.e. relative tradable prices across countries (external prices) and the sectoral prices of tradables and non-tradables within countries (internal prices). The paper also compares the inflation and growth effects of inflation targeting regimes with non-inflation targeters. Journal: International Economic Journal Pages: 294-311 Issue: 2 Volume: 30 Year: 2016 Month: 6 X-DOI: 10.1080/10168737.2016.1148431 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1148431 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:2:p:294-311 Template-Type: ReDIF-Article 1.0 Author-Name: Thouraya Boujelbène Dammak Author-X-Name-First: Thouraya Boujelbène Author-X-Name-Last: Dammak Author-Name: Kamel Helali Author-X-Name-First: Kamel Author-X-Name-Last: Helali Title: Threshold Effects on the Relationship Between Inflation Rate and Economic Growth in Tunisia Abstract: Using an econometric technique suggested by Hansen [(2001). The new econometrics of structural change: Dating breaks in U.S. Labor productivity. Journal of Economic Perspectives, 15, 117–128], this paper studies the inflation–economic growth nexus in the case of Tunisia for the 1993-01–2012-11 period. The results show that there is one inflation threshold value that does exist for Tunisia. This evidence strongly sustains the view that the relationship between inflation rate and economic growth is non-linear. The estimated threshold regression model suggests that a threshold value of inflation rate below 3.48% fosters economic growth. In addition, above this threshold level, there is a statistically significant negative relationship between inflation rate and economic growth. These results have important implications to policy-makers who should pay attention to the inflation phenomena. Therefore, a new policy that takes into account such a threshold should be set up. Journal: International Economic Journal Pages: 310-325 Issue: 2 Volume: 31 Year: 2017 Month: 4 X-DOI: 10.1080/10168737.2017.1289546 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1289546 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:2:p:310-325 Template-Type: ReDIF-Article 1.0 Author-Name: Mohammad Ali Author-X-Name-First: Mohammad Author-X-Name-Last: Ali Author-Name: Alok K. Bohara Author-X-Name-First: Alok K. Author-X-Name-Last: Bohara Title: How Does FDI Respond to the Size of Shadow Economy: An Empirical Analysis under a Gravity Model Setting Abstract: Using a panel study under a gravity model setting focusing on data from 1999 to 2007 for Organization for Economic Co-operation and Development countries, we show that the size of the shadow economy in the host economy relative to the investor economy can play a significant role in attracting Foreign Direct Investment (FDI) inflows. We further explore nonlinearities in how shadow economy differentials affect incoming FDI. Our results match the theoretical predictions which highlight that opportunities for tax evasion can have an impact on the activities of Multinational Corporations. Journal: International Economic Journal Pages: 159-178 Issue: 2 Volume: 31 Year: 2017 Month: 4 X-DOI: 10.1080/10168737.2017.1314533 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1314533 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:2:p:159-178 Template-Type: ReDIF-Article 1.0 Author-Name: Abdul Rashid Author-X-Name-First: Abdul Author-X-Name-Last: Rashid Author-Name: Muhammad Akram Author-X-Name-First: Muhammad Author-X-Name-Last: Akram Title: Trade Competitiveness and Employment: Job Creation or Job Destruction Abstract: This paper empirically examines the impact of fluctuations in international trade competitiveness on employment in the UK manufacturing sector over the period 1999–2010. We find statistically significant but economically small effects of a shock to international trade competitiveness on the level of employment. Our results show that the adjustment process in employment mainly works through job creation. We also find that compared to large firms, small firms contribute more toward job creation than job destruction. Our results that changes in GDP growth rate and average wages are significantly related to employment suggest that the UK labour market significantly responds to market forces. Finally, we find that the effect of changes in the real exchange rate on both job creation and job destruction differs between exporting and non-exporting firms. Journal: International Economic Journal Pages: 245-296 Issue: 2 Volume: 31 Year: 2017 Month: 4 X-DOI: 10.1080/10168737.2017.1315157 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1315157 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:2:p:245-296 Template-Type: ReDIF-Article 1.0 Author-Name: Bilal Keskinsoy Author-X-Name-First: Bilal Author-X-Name-Last: Keskinsoy Title: Taxi, Takeoff and Landing: Behavioural Patterns of Capital Flows to Emerging Markets Abstract: This paper analyses volatility, persistence, predictability, correlation, comovement (or contagion risk) and sudden stop (reversibility) of capital flows (foreign direct investment (FDI), foreign portfolio equity investment, long-term and short-term debt flows) using time series econometric techniques for 24 emerging economies over 1970–2014. This is informative on the pattern and relationship between capital inflows, with implications for accommodating macroeconomic policies in countries receiving inflows. The paper also addresses the predictions of conventional theory, that differences are associated with the maturity of the capital (long-term vs. short-term), with the information-based trade-off model of Goldstein and Razin [(2006). An information-based trade off between foreign direct investment and foreign portfolio investment. Journal of International Economics, 70(1), 271–295], that differences are associated with the structure of the capital (equity vs. debt). In line with the latter, equity flows (FDI and portfolio) are less volatile and persistent, more predictable and less susceptible to sudden stops than debt flows. Contrary to conventional theory, short-term flows are not more volatile, but there is evidence that correlations and risks of contagion are strong within all capital flow components. Journal: International Economic Journal Pages: 179-205 Issue: 2 Volume: 31 Year: 2017 Month: 4 X-DOI: 10.1080/10168737.2017.1315158 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1315158 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:2:p:179-205 Template-Type: ReDIF-Article 1.0 Author-Name: Miguel Viegas Author-X-Name-First: Miguel Author-X-Name-Last: Viegas Author-Name: Ana Paula Ribeiro Author-X-Name-First: Ana Paula Author-X-Name-Last: Ribeiro Title: Fiscal Consolidations: A Theoretical Essay with a Heterogeneous-Agent Model Abstract: Since the emergence of the financial crisis, most of the EU countries have promoted impressive public interventions to support financial institutions, contributing to a significant rise in general government gross debt-to-GDP ratios. As such, the issue of how to best pursue a fiscal consolidation will become crucial regarding the fiscal policy stance. This paper aims at characterizing four different stylized debt consolidation strategies extensively identified in the literature (one pure revenue-based and three expenditure-based) in order to assess welfare affects and, in particular, the inequality effects involved. For this purpose, we built a general equilibrium heterogeneous-agent model capable of exploring the relationship between fiscal policy and the endogenous cross-section distribution of income and wealth. Moreover, we decompose the impacts on welfare criteria in order to distinguish pure efficiency effects from insurance and inequality effects. According to our simulations, the adjustment based on the reduction of unproductive expenditures came out to be the most welfare-enhancing compared to those based on tax increases or on social transfer reductions. Journal: International Economic Journal Pages: 206-223 Issue: 2 Volume: 31 Year: 2017 Month: 4 X-DOI: 10.1080/10168737.2017.1315159 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1315159 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:2:p:206-223 Template-Type: ReDIF-Article 1.0 Author-Name: Andrea Bonilla Bolaños Author-X-Name-First: Andrea Author-X-Name-Last: Bonilla Bolaños Title: Initiative for Infrastructure Integration in South America: Way Toward Regional Convergence Abstract: This paper studies how the public provision of transportation infrastructure impacts output convergence and trade integration in a two-country dynamic general equilibrium model in which the transportation cost between countries is endogenously determined by the stock of public infrastructure in both countries. Because of its particular conception, the so-called ‘Initiative for the Integration of Regional Infrastructure in South America $ ( $ (IIRSA $ ) $ )’ serves as the case of study. Data from Argentina and Brazil is thus used to solve the model. Two main results emerge. First, increasing public investment in infrastructure provides an impetus to commercial integration but does not necessarily generate output convergence. Second, the model shows that the only way for the two countries to achieve output convergence (in a win–win economic growth scenario) is to coordinate their increments on public infrastructure, as proposed by IIRSA. Journal: International Economic Journal Pages: 326-354 Issue: 2 Volume: 31 Year: 2017 Month: 4 X-DOI: 10.1080/10168737.2017.1315160 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1315160 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:2:p:326-354 Template-Type: ReDIF-Article 1.0 Author-Name: Yutaka Suzuki Author-X-Name-First: Yutaka Author-X-Name-Last: Suzuki Author-Name: Yoshihiro Tsuranuki Author-X-Name-First: Yoshihiro Author-X-Name-Last: Tsuranuki Title: ‘An Incomplete Contract Approach to Eurozone Fiscal Governance’ – Commitment vs. Flexibility Abstract: In this paper, we take an incomplete contract approach to Eurozone Fiscal Governance between the European Commission (EC) and any heavily debt member state, Greece in particular. Incomplete contract approach makes possible to put a long process of Eurozone Fiscal Governance into an extensive form game in which a renegotiation procedure is incorporated. We theoretically reveal the conflict of interests between the EC (Germany) and Greece over the Greek debt repayment plan proposed in 2015. We show that the Greek’s position is consistent with incomplete contract theory, but that the EC (Germany) does not allow the renegotiation for restructuring for growth-oriented debt repayment program proposed by the Greek government because the EC (Germany) judges that the commitment effect (on fiscal austerity) is greater than the flexibility one (pro-growth effect). This will undoubtedly provide a novel and interesting approach to Eurozone Fiscal Governance. Journal: International Economic Journal Pages: 297-309 Issue: 2 Volume: 31 Year: 2017 Month: 4 X-DOI: 10.1080/10168737.2017.1315736 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1315736 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:2:p:297-309 Template-Type: ReDIF-Article 1.0 Author-Name: Michael Gove Author-X-Name-First: Michael Author-X-Name-Last: Gove Title: Migration's Contribution to Trade: State-Level Evidence on the Importance of Destination Geographic Proximity Abstract: I empirically analyze the importance of differing levels of geographic proximity, providing the first results of the migrant-trade nexus at the state level for both places of destination and origin. Relying on a unique dataset allowing the mapping of Mexican-born migrants' US states of residence to Mexican states of origin, I ensure a precise measurement of migrant networks and other potential determinants of international trade, including the distance and mass variables fundamental to any gravity model. Furthermore, I unmask distinct levels of geographic proximity that a single migration estimate disguises, estimating statistically significant elasticities of exports to in-state, and neighboring-state migration. These figures are not only qualitatitvely but also quantitatively important, corresponding to partial contributions of $1984 (in-state) and $538 (neighboring-state) to annual exports between respective US and Mexican states associated with each average additional migrant. Journal: International Economic Journal Pages: 224-244 Issue: 2 Volume: 31 Year: 2017 Month: 4 X-DOI: 10.1080/10168737.2017.1316296 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1316296 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:2:p:224-244 Template-Type: ReDIF-Article 1.0 Author-Name: Dionysios Karavidas Author-X-Name-First: Dionysios Author-X-Name-Last: Karavidas Title: Firms' Spatial Sorting and Market Access Abstract: Using a model with heterogeneous firms, that consists of a system of two integrated regions (a large core region and a small periphery region) and an external third region, I study the impact of external trade openness on firms' spatial sorting patterns within the system of the two regions. Applying the main theoretical findings of this model in the case of Brexit, I find that impaired access to and from the UK induces less manufacturing firms to relocate from the periphery to the core of the EU. Other findings show that as the external region becomes more important relative to the system of the two integrated regions (i.e. its productivity goes up or/and its market size goes up), the most efficient manufacturing firms find it profitable to leave the small periphery region and migrate to the large core region. Journal: International Economic Journal Pages: 573-584 Issue: 4 Volume: 33 Year: 2019 Month: 10 X-DOI: 10.1080/10168737.2019.1677741 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1677741 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:4:p:573-584 Template-Type: ReDIF-Article 1.0 Author-Name: Gylfi Magnusson Author-X-Name-First: Gylfi Author-X-Name-Last: Magnusson Title: It is not SAD if you Sell in May: Seasonal Effects in Stock Markets Revisited Abstract: This paper examines one type of calendar effect in financial markets, seasonal variation in the return on stocks. The effect analyzed is referred to as the Halloween Effect or Sell in May and Go Away. This refers to the finding that stock markets tend to return considerably less in the six months beginning in May than in the other half of the year. This effect has persisted over time and is seemingly large enough to be economically significant. The alternative, but somewhat overlapping hypothesis, that seasonal affective disorder, SAD, creates seasonal variation in the return on stocks is also addressed. Based on daily data from 75 stock markets during the period 2000–2014 there is a strong calendar effect in a large majority of the markets as the period from November to April witnesses higher returns than do the other six months of the year. However, there is only weak evidence that SAD had any effect on stock prices. The paper shows that Halloween Effect seems to be remarkably consistent, even after being widely discussed, and both statistically and economically significant. However, it remains unexplained. The SAD hypothesis finds less support in the data and seems of limited relevance economically. Journal: International Economic Journal Pages: 585-604 Issue: 4 Volume: 33 Year: 2019 Month: 10 X-DOI: 10.1080/10168737.2019.1641539 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1641539 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:4:p:585-604 Template-Type: ReDIF-Article 1.0 Author-Name: Miao Wang Author-X-Name-First: Miao Author-X-Name-Last: Wang Author-Name: Hong Zhuang Author-X-Name-First: Hong Author-X-Name-Last: Zhuang Title: How Does Foreign Aid Affect Total Fertility Rate? Panel Data Evidence Abstract: We explore the relationship between aid and the total fertility rate in recipient countries, which is closely linked to the literature on aid and economic development. Using data on official development assistance in 86 developing countries over 1970–2015 and controlling for potential endogeneity issues, we find that foreign aid helps to lower the total fertility rate in recipient countries in general. In addition, our results suggest that development assistance is most effective in lower-income countries or countries with a lower level of human capital. We also observe considerable regional heterogeneities regarding the effect of aid on the total fertility rate. Journal: International Economic Journal Pages: 605-619 Issue: 4 Volume: 33 Year: 2019 Month: 10 X-DOI: 10.1080/10168737.2019.1620306 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1620306 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:4:p:605-619 Template-Type: ReDIF-Article 1.0 Author-Name: Muntazir Hussain Author-X-Name-First: Muntazir Author-X-Name-Last: Hussain Author-Name: Usman Bashir Author-X-Name-First: Usman Author-X-Name-Last: Bashir Title: Impact of Monetary Policy on Bank Lending: Does Market Structure Matter? Abstract: This study investigated the role of various factors in the bank lending channel of monetary policy transmission. Using annual data (2000–2012) from the Chinese banking industry, the result of this study suggest that bank lending channel neither operates through balance sheet characteristics nor through bank risk. However, this study provides significant evidence of the lending channel operates through the market structure. The market power undermines the effect of monetary policy on bank lending. The results have important policy implications for the Chinese banking industry. Although higher competition raises concerns about financial stability, however, in this case, higher market power has a detrimental effect on bank lending channel and monetary policy transmission. Such results may argue pro-competitive policy in the Chinese banking market so that the desired objective of monetary policy can be achieved. Journal: International Economic Journal Pages: 620-648 Issue: 4 Volume: 33 Year: 2019 Month: 10 X-DOI: 10.1080/10168737.2019.1668820 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1668820 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:4:p:620-648 Template-Type: ReDIF-Article 1.0 Author-Name: Bernd Kempa Author-X-Name-First: Bernd Author-X-Name-Last: Kempa Author-Name: Nazmus Sadat Khan Author-X-Name-First: Nazmus Sadat Author-X-Name-Last: Khan Title: Global Macroeconomic Repercussions of US Trade Restrictions: Evidence from a GVAR Model Abstract: We employ a global vector autoregression (GVAR) model to analyze international spillover effects of US trade restrictions, modeled as a reduction of US imports. Our sample consists of the US and 25 countries in the rest of the world, grouped into larger regions comprising European nations, non-European industrial countries and emerging economies. We find US trade restrictions to reduce trade volumes and income levels in the rest of the world as well as in the US. The trade balance deteriorates across all world regions except in the US, where it is unaffected by the trade restrictions. We also model the effects of a trade war in which the rest of the world responds in equal measure to the trade restrictions imposed by the US. We again find that export and import activity recedes both in the US and in the rest of the world, although the resulting effects are now strongest in the short run. The trade balance improves in the rest of the world but deteriorates in the US. In terms of the GDP response, the rest of the world is initially much harder hit by the imposition of the retaliatory trade measure than is the US. Journal: International Economic Journal Pages: 649-661 Issue: 4 Volume: 33 Year: 2019 Month: 10 X-DOI: 10.1080/10168737.2019.1657476 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1657476 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:4:p:649-661 Template-Type: ReDIF-Article 1.0 Author-Name: Hem Chandra Basnet Author-X-Name-First: Hem Chandra Author-X-Name-Last: Basnet Author-Name: Ficawoyi Donou-Adonsou Author-X-Name-First: Ficawoyi Author-X-Name-Last: Donou-Adonsou Author-Name: Kamal Upadhyaya Author-X-Name-First: Kamal Author-X-Name-Last: Upadhyaya Title: Workers’ Remittances and the Dutch Disease: Evidence From South Asian Countries Abstract: Large inflows of foreign money into a country can appreciate its domestic currency, which can adversely affect its current account balance. South Asian countries receive a significant amount of foreign currency as remittances. In this paper, we examine the Dutch disease effect of remittances in five South Asian countries, namely Bangladesh, India, Nepal, Pakistan and Sri Lanka using panel data from 1975 to 2014. Panel cointegration test provides evidence of the long-run relationship between remittances and the real exchange rate. The Fully Modified Ordinary Least Squares Method (FMOLS) is used to estimate the impact of remittances on real exchange rates. The findings suggest that remittances do appreciate the real exchange rate in South Asia. Pesaran, Shin, and Smith ([1999]. Pooled Mean Group Estimation of Dynamic Heterogeneous Panels. Journal of the American Statistical Association, 94, 621–634) Pool Mean Group (PMG) estimation technique is used to check the robustness of the findings. The PMG test results confirm the findings from the FMOLS. Journal: International Economic Journal Pages: 662-678 Issue: 4 Volume: 33 Year: 2019 Month: 10 X-DOI: 10.1080/10168737.2019.1666291 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1666291 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:4:p:662-678 Template-Type: ReDIF-Article 1.0 Author-Name: Nedra Baklouti Author-X-Name-First: Nedra Author-X-Name-Last: Baklouti Author-Name: Younes Boujelbene Author-X-Name-First: Younes Author-X-Name-Last: Boujelbene Title: The Economic Growth–Inflation–Shadow Economy Trilogy: Developed Versus Developing Countries Abstract: This study investigates the nexus among the economic growth–inflation–shadow economy trilogy by including the role of political stability for a sample of 33 developed and 14 developing countries over the 2005–2016 period. For the OECD countries, our results showed a bidirectional nexus among economic growth and the size of the shadow economy while the causality running from economic growth to inflation, on the one hand, and from inflation to the informal economy, on the other hand, is unidirectional. As for the MENA panel, the relationship between inflation and the underground economy remains bidirectional, while the relationship running from inflation to economic growth, on the one hand, and from the informal economy to economic growth, on the other hand, is unidirectional. With the introduction of political stability, the nexus among the informal economy and the inflation in the OECD countries becomes unidirectional running from inflation to the shadow economy. However, in the case of MENA countries, controlling for political stability reduces the magnitude of the coefficient of the shadow economy on inflation. We note that with a low level of political stability, countries facing the large size of the informal sector will shift their financing from taxes to seigniorage. Journal: International Economic Journal Pages: 679-695 Issue: 4 Volume: 33 Year: 2019 Month: 10 X-DOI: 10.1080/10168737.2019.1641540 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1641540 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:4:p:679-695 Template-Type: ReDIF-Article 1.0 Author-Name: Chandan Sharma Author-X-Name-First: Chandan Author-X-Name-Last: Sharma Author-Name: Debdatta Pal Author-X-Name-First: Debdatta Author-X-Name-Last: Pal Title: Does Exchange Rate Volatility Dampen Imports? Commodity-Level Evidence From India Abstract: This paper studies the effect of exchange rates’ volatility on India’s imports on a balanced panel of 73 commodities spanned from April 2013 to October 2016. Rather than using cross-country bilateral import flows, we test the relationship at the commodity level using disaggregated trade data with monthly frequency. Generalized autoregressive conditional heteroscedasticity model is used for estimating exchange rate. We employ pooled mean group estimator for simultaneously assessing long- and short-run association between nominal exchange rate volatility and import volume. In the long-run, for all commodities, a 100% increase in volatility results in a 12% drop in India’s imports. A significant dampening impact of volatility of exchange rate on imports is evidenced also in short-run. However, at the disaggregate level, imports in the agricultural and allied sector are found to be relatively more sensitive to exchange rate volatility as compared to the manufacturing sector. We also conducted a time series analysis for the aggregate data covering both pre- and post-crisis period. The results validate the findings of commodities-level panel data analysis. This paper concludes with policy implications of our findings. Journal: International Economic Journal Pages: 696-718 Issue: 4 Volume: 33 Year: 2019 Month: 10 X-DOI: 10.1080/10168737.2019.1630467 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1630467 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:4:p:696-718 Template-Type: ReDIF-Article 1.0 Author-Name: João Tovar Jalles Author-X-Name-First: João Tovar Author-X-Name-Last: Jalles Title: Monetary Aggregates and Macroeconomic Performance: The Portuguese Escudo, 1911–1999 Abstract: This paper provided a full characterization of several monetary aggregates over Portuguese's historical economic business cycles. By focusing on the 1911–1999 period, the paper also revisits the issue of the role of money on real macroeconomic outcomes, inspired from the monetarists versus Keynesians debate on quest for validity of money (non-)neutrality. By means of descriptive statistics we first uncover that money changes were associated with changes in real economic activity. Most monetary aggregates are more volatile than GDP, display high serial autocorrelation, are generally countercyclical and lead the economic cycle. Then, through econometric analysis, our results show that our monetary series were characterized by unit roots and were cointegrated with real GDP. Evidence also suggested that money supply Granger-caused real GDP. Finally, both variance decomposition and impulse response function analyses from an estimated BVAR, uncovered a persistent and mutual effect running from a shock in real GDP to monetary aggregates and vice versa, therefore supporting the money non-neutrality hypothesis in the case of Portugal. Journal: International Economic Journal Pages: 719-740 Issue: 4 Volume: 33 Year: 2019 Month: 10 X-DOI: 10.1080/10168737.2019.1609064 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1609064 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:4:p:719-740 Template-Type: ReDIF-Article 1.0 Author-Name: Georgia Babici Author-X-Name-First: Georgia Author-X-Name-Last: Babici Author-Name: Ernesto Crivelli Author-X-Name-First: Ernesto Author-X-Name-Last: Crivelli Author-Name: Marina Marinkov Author-X-Name-First: Marina Author-X-Name-Last: Marinkov Title: Tax Administration Strength and Tax Efficiency in Emerging Europe: Lessons for Romania Abstract: Tax administration reform is a top priority to address large tax compliance gaps in emerging Europe. This paper uses an indicator based on objective criteria to assess the strength of Romania's tax administration relative to peer countries. In doing so, it illustrates various ways in which Romania could boost tax efficiency and thereby tax collection by improving key organizational and operational aspects of its tax administration. Journal: International Economic Journal Pages: 741-756 Issue: 4 Volume: 33 Year: 2019 Month: 10 X-DOI: 10.1080/10168737.2019.1689283 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1689283 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:4:p:741-756 Template-Type: ReDIF-Article 1.0 Author-Name: Chor Foon Tang Author-X-Name-First: Chor Foon Author-X-Name-Last: Tang Author-Name: Eu Chye Tan Author-X-Name-First: Eu Chye Author-X-Name-Last: Tan Title: Re-visiting the Savings-Led Growth Hypothesis and Its Stability in East Asian Economies Abstract: The causal relationships between savings and economic growth have been given special attention because it has significant implication on policy-making. Nevertheless, the direction of causality remains unclear as previous studies failed to provide persuasive evidence to support the savings-led growth hypothesis. Therefore, the primary aim of this study is to empirically re-investigate the savings–growth nexus in selected East Asian economies. It covers the quarterly sample period from 1970:Q1 to 2011:Q4. Our empirical results reveal that savings, economic growth and some other variables are cointegrated in these economies. Additionally, the causality results exhibit that the causal effect from savings to economic growth is stable over the period of analysis. Therefore, the probability of success in boosting economic growth through any policy action to induce greater savings is the greatest in the case of East Asian economies. Journal: International Economic Journal Pages: 436-447 Issue: 3 Volume: 31 Year: 2017 Month: 7 X-DOI: 10.1080/10168737.2017.1325386 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1325386 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:3:p:436-447 Template-Type: ReDIF-Article 1.0 Author-Name: Katsuya Ito Author-X-Name-First: Katsuya Author-X-Name-Last: Ito Title: Remittances and the Dutch Disease: Evidence from the Republic of Moldova Abstract: This paper analyzes the linkage between exports, real effective exchange rates, and workers’ remittances in the Republic of Moldova based on impulse response functions through a vector autoregressive model. We find that an inflow of remittances leads to an appreciation of real exchange rate and a decline of exports, but the magnitude is small. Another finding is that the exchange rate appreciation does not affect remittance transfers for the first three-quarters. Journal: International Economic Journal Pages: 462-469 Issue: 3 Volume: 31 Year: 2017 Month: 7 X-DOI: 10.1080/10168737.2017.1326514 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1326514 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:3:p:462-469 Template-Type: ReDIF-Article 1.0 Author-Name: Eiji Yamamura Author-X-Name-First: Eiji Author-X-Name-Last: Yamamura Title: Effect of Historical Educational Level on Perceived Inequality, Preference for Redistribution and Progressive Taxation Abstract: This paper investigated the extent to which educational levels in the nineteenth century have shaped present-day norms, which influence the perceptions of present-day individuals, such as individuals’ perceived inequality, preference for redistribution, and progressive taxation. Cross-country, individual-level data were used to examine historical educational level and present-day perceptions of social and political issues. After controlling for various country-level and individual characteristics, the major findings were as follows: people in countries with higher educational levels in 1870 are less likely to support redistribution policies and progressive taxation. Moreover, people in countries with higher educational levels in 1870 are more likely to consider income inequality to be smaller. Journal: International Economic Journal Pages: 355-369 Issue: 3 Volume: 31 Year: 2017 Month: 7 X-DOI: 10.1080/10168737.2017.1330355 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1330355 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:3:p:355-369 Template-Type: ReDIF-Article 1.0 Author-Name: Dierk Herzer Author-X-Name-First: Dierk Author-X-Name-Last: Herzer Title: Refugee Immigration and Total Factor Productivity Abstract: This paper uses panel cointegration and causality techniques to examine the long-run relationship between refuge immigration and total factor productivity (TFP), a relationship that has not yet been examined in the literature. It is found that refugee immigration has, on average, a positive long-run effect on TFP, suggesting that refuge immigration increases the diversity of skills and ideas available to society as a whole, which in turn promotes specialization and innovation. It is also found that causality is unidirectional from refugee immigration to TFP, suggesting that refugees are primarily motivated by the push factor of persecution in the source country rather than by productivity (and hence welfare) gains as a potential pull factor in the destination country. Journal: International Economic Journal Pages: 390-414 Issue: 3 Volume: 31 Year: 2017 Month: 7 X-DOI: 10.1080/10168737.2017.1330356 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1330356 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:3:p:390-414 Template-Type: ReDIF-Article 1.0 Author-Name: Simplice Asongu Author-X-Name-First: Simplice Author-X-Name-Last: Asongu Author-Name: John Ssozi Author-X-Name-First: John Author-X-Name-Last: Ssozi Title: When is Foreign Aid Effective in Fighting Terrorism? Threshold Evidence Abstract: Building on the previous literature, we assess when foreign aid is effective in fighting terrorism using quantile regressions on a panel of 78 developing countries for the period 1984–2008. Bilateral, multilateral and total aid indicators are used whereas terrorism includes: domestic, transnational, unclear and total terrorism dynamics. We consistently establish that foreign aid (bilateral, multilateral and total) is effective at fighting terrorism exclusively in countries where existing levels of transnational terrorism are highest. This finding is consistent with our theoretical underpinnings because donors have been documented to allocate more aid towards fighting transnational terrorist activities in recipient countries because they are more likely to target their interests. Moreover, the propensity of donor interest at stake is likely to increase with initial levels of transnational terrorism, such that the effect of foreign aid is most significant in recipient countries with the highest levels of transnational terrorism. Policy implications and future research directions are discussed. Journal: International Economic Journal Pages: 370-389 Issue: 3 Volume: 31 Year: 2017 Month: 7 X-DOI: 10.1080/10168737.2017.1350731 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1350731 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:3:p:370-389 Template-Type: ReDIF-Article 1.0 Author-Name: Moussa K. Fall Author-X-Name-First: Moussa K. Author-X-Name-Last: Fall Title: Trade Flows Versus Capital Flows: Are China’s Trade Surpluses Overestimated? Abstract: China has received massive foreign capital inflows after experiencing capital flight earlier in the last decade. The present paper offers estimates of capital inflows into China through the misinvoicing of trade after having outlined a model describing how trade prices could be manipulated by firms. In fact, the widely perceived undervalued Yuan has fueled expectations of a future revaluation of the Chinese currency. In a panel gravity modeling framework, we show that, China’s export and import prices for some commodities are sensitive to the non-deliverable forward exchange rate for the RMB in Hong Kong. In light of the evolution of this rate, which has rather systemically reflected anticipated revaluation of the Chinese currency, it is contended that the persistent Chinese trade imbalances may actually camouflage hidden ‘hot money’ inflows. Our findings provide evidence for export over-invoicing and import under-invoicing. Journal: International Economic Journal Pages: 448-461 Issue: 3 Volume: 31 Year: 2017 Month: 7 X-DOI: 10.1080/10168737.2017.1354905 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1354905 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:3:p:448-461 Template-Type: ReDIF-Article 1.0 Author-Name: Ben Ali Tarek Author-X-Name-First: Ben Ali Author-X-Name-Last: Tarek Author-Name: Zidi Ahmed Author-X-Name-First: Zidi Author-X-Name-Last: Ahmed Title: Institutional Quality and Public Debt Accumulation: An Empirical Analysis Abstract: The question of public debt management for both developed and developing economies has generated an enormous amount of political as well as academic interest. This study examines how governance affects public debt accumulation in the MENA countries during the 1996–2015 period. The six Worldwide Governance indicators (voice and accountability, political stability and the absence of violence/terrorism, government effectiveness, regulatory quality, rule of law and control of corruption) were used to measure the quality of governance in these countries. The results show that only three governance indicators support well the hypothesis that poor governance leads to higher accumulation of MENA public debt. Moreover, the estimates suggest a significant indirect impact of bad governance operating via decreased GDP growth. These findings have important implications for policy makers of these countries, which are currently facing major fiscal and external imbalances due to the high cost of war and terrorist attacks, low oil prices and a decline in trade. Sound public debt management represents an urgent task especially that public debt management problems often find their origins in the lack of attention paid by policymakers to the costs of bad governance and weak macroeconomic management. Journal: International Economic Journal Pages: 415-435 Issue: 3 Volume: 31 Year: 2017 Month: 7 X-DOI: 10.1080/10168737.2017.1354906 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1354906 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:3:p:415-435 Template-Type: ReDIF-Article 1.0 Author-Name: Shinji Takagi Author-X-Name-First: Shinji Author-X-Name-Last: Takagi Title: Applying the Lessons of Asia: The IMF's Crisis Management Strategy following the Global Financial Crisis Abstract: The paper reviews the International Monetary Fund's (IMF's) non-concessional lending programs following the global financial crisis, with a view to understanding how the IMF applied the lessons of the Asian crisis in designing its approach to crisis management. For this purpose, the paper focuses on the 2008 programs in Hungary, Iceland, Latvia and Ukraine – the first of its kind since the early 2000s – and compares them with the 1997 programs in Indonesia, Korea and Thailand. Our analysis finds the European programs better funded and their structural conditionality more focused. Other than these, the overall thrust of the programs was similar: fiscal and monetary tightening, coupled with banking reforms. The real difference was not so much about content but about philosophy. Relative to the Asian programs, the European programs were characterized by more emphasis on ownership, greater collaboration among stakeholders, more realistic assumptions and greater transparency about the risks and the logic of policy actions, and more built-in flexibility of targets and policy options. This approach to crisis management incorporated the changes that had been made since the Asian crisis in the IMF's policies and procedures to manage capital account crises more effectively. Journal: International Economic Journal Pages: 409-428 Issue: 3 Volume: 30 Year: 2016 Month: 7 X-DOI: 10.1080/10168737.2015.1136669 File-URL: http://hdl.handle.net/10.1080/10168737.2015.1136669 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:3:p:409-428 Template-Type: ReDIF-Article 1.0 Author-Name: Joshua Aizenman Author-X-Name-First: Joshua Author-X-Name-Last: Aizenman Title: International Coordination and Precautionary Policies Abstract: This paper highlights the rare conditions that lead to international cooperation, and the reasons why eliciting this cooperation may be beneficial in preventing adverse tail shocks from spiraling into global depressions. In normal economic times, deeper macro cooperation among countries is associated with welfare gains akin to Harberger’s second-order magnitude triangle, thus making the odds of cooperation low. When bad tail events induce imminent threats of financial collapse, the perceived losses have a first-order magnitude of terminating the total Marshalian surpluses. The apprehension of these losses in perilous times may elicit rare and beneficial macro cooperation. We close the paper by overviewing the obstacles preventing cooperation and the proliferation of precautionary policies of emerging market economies as a second-best outcome of limited cooperation. Journal: International Economic Journal Pages: 379-391 Issue: 3 Volume: 30 Year: 2016 Month: 7 X-DOI: 10.1080/10168737.2016.1211839 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1211839 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:3:p:379-391 Template-Type: ReDIF-Article 1.0 Author-Name: James M. Boughton Author-X-Name-First: James M. Author-X-Name-Last: Boughton Title: The IMF as just One Creditor: Who’s in Charge When a Country Can’t Pay? Abstract: The international community’s management of the 2010 financial crisis in Greece revealed a major gap in the international financial system. No single institution is any longer unambiguously in charge. Consequently, the path is open for narrow interests to predominate over global interests. An examination of postwar history shows that this problem has been growing gradually since the 1970s and has become much greater since the mid-1990s. To alleviate the problem, the International Monetary Fund needs to develop an effective strategy for reducing the opportunities for creditor countries to intervene in decisions on how crises should be resolved. Journal: International Economic Journal Pages: 392-408 Issue: 3 Volume: 30 Year: 2016 Month: 7 X-DOI: 10.1080/10168737.2016.1211840 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1211840 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:3:p:392-408 Template-Type: ReDIF-Article 1.0 Author-Name: Barry Eichengreen Author-X-Name-First: Barry Author-X-Name-Last: Eichengreen Title: Coping with Global Volatility: Editor’s Introduction Journal: International Economic Journal Pages: 313-321 Issue: 3 Volume: 30 Year: 2016 Month: 7 X-DOI: 10.1080/10168737.2016.1211841 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1211841 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:3:p:313-321 Template-Type: ReDIF-Article 1.0 Author-Name: Shin-ichi Fukuda Author-X-Name-First: Shin-ichi Author-X-Name-Last: Fukuda Title: Regional Liquidity Risk and Covered Interest Parity During the Global Financial Crisis: Evidence from Tokyo, London, and New York Abstract: During the global financial crisis, there were substantial deviations from covered interest parity (CIP) condition. In particular, in the post-Lehman period, the US dollar interest rate became very low on the forward market. However, the deviations from the CIP condition varied across markets. After presenting a simple model, the following analysis examines how the CIP condition between the Japanese yen and the US dollar was violated in Tokyo, London, and New York markets. We show that the CIP deviations became largest in the New York market soon after the Lehman shock but were largest in the Tokyo market in the rest of the turmoil period. The regressions suggest that market-specific credit risks and central banks’ liquidity provisions explained the difference across the markets. In particular, they indicate that larger dollar-specific risk and smaller yen-specific risk caused larger deviations in the Tokyo market. Journal: International Economic Journal Pages: 339-359 Issue: 3 Volume: 30 Year: 2016 Month: 7 X-DOI: 10.1080/10168737.2016.1211842 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1211842 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:3:p:339-359 Template-Type: ReDIF-Article 1.0 Author-Name: Georgios Karras Author-X-Name-First: Georgios Author-X-Name-Last: Karras Title: Macroeconomic Volatility and the Current Account: Evidence from a Panel of OECD Countries Abstract: This paper investigates the relationship between macroeconomic volatility and the current account. Using quarterly data for a panel of OECD economies, time-varying relative volatility measures are constructed for GDP, net output, and government consumption. The empirical evidence suggests that current account balances are positively affected by all three volatility measures. Moreover, the current account balance is found to be related positively to output growth and negatively to the growth of government consumption. Evidence from saving and investment rates also suggests that the precautionary saving motive is part of (though perhaps not the entire) mechanism that relates output volatility and the current account. Broadly consistent with the predictions of the standard theoretical model, these estimates are sizable, statistically significant, and robust. Journal: International Economic Journal Pages: 322-338 Issue: 3 Volume: 30 Year: 2016 Month: 7 X-DOI: 10.1080/10168737.2016.1211843 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1211843 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:3:p:322-338 Template-Type: ReDIF-Article 1.0 Author-Name: Young Se Kim Author-X-Name-First: Young Se Author-X-Name-Last: Kim Author-Name: Gwi Hwan Seol Author-X-Name-First: Gwi Hwan Author-X-Name-Last: Seol Title: Monetary Policy Regime Shifts and Uncovered Interest Parity Revisited: The Euro–US Dollar Exchange Rate Abstract: To explore possible sources of the well-documented uncovered interest parity (UIP) violation in the foreign exchange market, this paper scrutinizes structural changes in monetary reactions to inflationary pressure in the conventional approaches to nominal exchange rate and examines how this small but important change has an effect on the empirical implications of the UIP condition. In addition to some salient features found in the euro exchange rate, by introducing occasional monetary policy regime shifts into an otherwise standard open-economy dynamic general equilibrium model, we found some important findings that potentially help better understand exchange rate dynamics. During the entire sample period, 1999:M1–2014:M8, exchange rate disconnect puzzle still exists. However, sub-sample analysis suggests that relatively passive monetary reaction implying less frequent intervention by monetary authority tends to be more consistent with the UIP relation. Simulation results support the empirical regularities. Journal: International Economic Journal Pages: 360-378 Issue: 3 Volume: 30 Year: 2016 Month: 7 X-DOI: 10.1080/10168737.2016.1221248 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1221248 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:3:p:360-378 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Erratum Journal: International Economic Journal Pages: (iii)-(iii) Issue: 3 Volume: 30 Year: 2016 Month: 7 X-DOI: 10.1080/10168737.2016.1228327 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1228327 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:3:p:(iii)-(iii) Template-Type: ReDIF-Article 1.0 Author-Name: Marco Riguzzi Author-X-Name-First: Marco Author-X-Name-Last: Riguzzi Author-Name: Philipp Wegmueller Author-X-Name-First: Philipp Author-X-Name-Last: Wegmueller Title: Economic Openness and Fiscal Multipliers Abstract: Recent empirical findings attribute a central role to the degree of economic openness to determine the size of the fiscal multiplier. See, for instance, Ilzetzki et al. (2013) [How big (small?) are fiscal multipliers? Journal of Monetary Economics, 60(2), 239–254]. However, traditional macroeconomic models have difficulties to account for this evidence. By introducing ‘deep-habit’ formation into a New Keynesian small open economy model, this paper provides a theoretical framework which is able to attest for the new empirical evidence. Deep habits give rise to counter-cyclical firm markups, which are crucial to generate effects of openness on the fiscal multiplier as found in the data. We study three dimensions of economic openness: exchange rate flexibility, trade openness, and capital mobility. In line with the empirical findings, we report a negative relationship between measures of economic openness and the fiscal multiplier. Journal: International Economic Journal Pages: 1-35 Issue: 1 Volume: 31 Year: 2017 Month: 1 X-DOI: 10.1080/10168737.2016.1204337 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1204337 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:1:p:1-35 Template-Type: ReDIF-Article 1.0 Author-Name: Mohammed Shuaibu Author-X-Name-First: Mohammed Author-X-Name-Last: Shuaibu Title: The Effect of Trade Liberalisation on Poverty in Nigeria: A Micro–Macro Framework Abstract: Despite the deployment of several policy prescriptions towards ameliorating poverty in Nigeria, the incidence has remained pervasive. Therefore, this paper seeks to examine the impact of trade liberalisation on poverty in Nigeria. A major contribution is the use of an integrated computable general equilibrium microsimulation model, derived from Winters’ trade liberalisation framework that focused on product and factor market channels. The model was calibrated with data inputs drawn from a 2006 social accounting matrix that was reconciled with heterogeneous households’ income and expenditure data obtained from the 2004 Nigerian living standard survey. Policy simulations that reflected actual trade reductions were carried out while rural and urban poverty effects associated with trade liberalisation were computed using the Foster–Greer–Thoerbecke index. Findings reveal the moderate poverty-reducing effect of agriculture and manufacturing sector trade liberalisation with the effect being relatively more pronounced in urban centres. The weak sectoral linkages (particularly between agriculture and manufacturing) combined with the low income and price effects partly explained these poverty-reducing outcomes. The study concludes that trade liberalisation cannot be solely relied upon by the government to address the rising incidence of poverty in Nigeria and therefore, should be used as a complimentary policy to alleviate poverty. Journal: International Economic Journal Pages: 68-93 Issue: 1 Volume: 31 Year: 2017 Month: 1 X-DOI: 10.1080/10168737.2016.1221984 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1221984 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:1:p:68-93 Template-Type: ReDIF-Article 1.0 Author-Name: António Afonso Author-X-Name-First: António Author-X-Name-Last: Afonso Author-Name: João Tovar Jalles Author-X-Name-First: João Tovar Author-X-Name-Last: Jalles Title: The Price Relevance of Fiscal Developments Abstract: We use Seemingly Unrelated Regressions Estimation methods to assess the link between prices, bond yields and the fiscal behavior. A first equation determines the country-specific cost of government financing via the long-term government bond yield, as a function of budget balance positions. A second equation links the price level to the cost of government financing. Our results for 15 EU countries in the period 1980Q1–2013Q4 show that improvements in the fiscal stance lead to persistent falls in sovereign yields; higher sovereign yields are reflected in upward price movements; improvements in the fiscal stance in recession times lead to short-term decreases in yields and better fiscal stance in expansions induce downward movement in bond yields only after 8 quarters. Journal: International Economic Journal Pages: 36-50 Issue: 1 Volume: 31 Year: 2017 Month: 1 X-DOI: 10.1080/10168737.2016.1227348 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1227348 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:1:p:36-50 Template-Type: ReDIF-Article 1.0 Author-Name: Evangelia Papapetrou Author-X-Name-First: Evangelia Author-X-Name-Last: Papapetrou Author-Name: Pinelopi Tsalaporta Author-X-Name-First: Pinelopi Author-X-Name-Last: Tsalaporta Title: Inter-Industry Wage Differentials in Greece: Evidence from Quantile Regression Analysis Abstract: Using a consistent estimator of the covariance matrix of the asymptotic distribution of the quantile regression estimator with intra-cluster correlation of the error terms, the paper investigates whether and to what extent inter-industry wage differentials derive from worker heterogeneity in the form of unobserved quality. To conduct this study, we pioneer in utilizing a unique data set, the European Union Structure of Earnings Survey for Greece, which follows a two-stage random sampling approach of employees clustered within firms. Data refer to 2010 when the first elements of the economic adjustment programme to deal with the chronic deficiencies of the Greek economy and restore sustainable public finances, competitiveness and set the foundation for long-term growth, gained visibility. Results point to high wage dispersion across industries at the mean of the conditional wage distribution, even after controlling for personal and workplace characteristics. However, evidence for the unobserved heterogeneity hypothesis is rather scant. Therefore, there is room for efficiency wage or rent-sharing theories in accounting for a large part of inter-industry wage differentials tentatively implying that firm heterogeneity in the ability to pay matters more than employee unobservable attributes in the wage determination process. Journal: International Economic Journal Pages: 51-67 Issue: 1 Volume: 31 Year: 2017 Month: 1 X-DOI: 10.1080/10168737.2016.1245351 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1245351 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:1:p:51-67 Template-Type: ReDIF-Article 1.0 Author-Name: Yasmina Ghanem Author-X-Name-First: Yasmina Author-X-Name-Last: Ghanem Author-Name: Mohamed Achouche Author-X-Name-First: Mohamed Author-X-Name-Last: Achouche Title: Financial Development Impact on Firm Dynamic Creation: Panel Data Evidence on MENA Countries Abstract: Using a panel of 14 MENA countries, this paper investigates and examines whether financial development trains a substantial effect on entrepreneurship development by facilitating the rise of new firms. Generalized Two-Stage Least Squares estimate results with instrumental variables highlight the relevance of developed financial systems for the creation of new firms. In overall, financial development and its component explained by the institutional quality exert a positive and significant effect on new entry density in oil MENA countries compared to non-oil ones. Journal: International Economic Journal Pages: 94-111 Issue: 1 Volume: 31 Year: 2017 Month: 1 X-DOI: 10.1080/10168737.2016.1245352 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1245352 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:1:p:94-111 Template-Type: ReDIF-Article 1.0 Author-Name: Jimoh Olajide Raji Author-X-Name-First: Jimoh Olajide Author-X-Name-Last: Raji Author-Name: Yusnidah Ibrahim Author-X-Name-First: Yusnidah Author-X-Name-Last: Ibrahim Author-Name: Siti-Aznor Ahmad Author-X-Name-First: Siti-Aznor Author-X-Name-Last: Ahmad Title: Stock Price Index and Exchange Rate Nexus in African Markets Abstract: This paper examines the relationship between stock price index and exchange rate in six African markets using monthly data for the period January 2007 to October 2015. A quantile regression approach is used. This methodology is shown to perform better than the ordinary least squares estimators, particularly when the conditional distribution is heterogeneous. Our empirical evidence reveals an interesting pattern in the association of these two financial markets in Africa, which shows that the negative relationship between stock and foreign exchange markets is more apparent when exchange rates are extremely low or high. The negative relationship between the two variables is in line with the portfolio balance effect. Journal: International Economic Journal Pages: 112-134 Issue: 1 Volume: 31 Year: 2017 Month: 1 X-DOI: 10.1080/10168737.2016.1245354 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1245354 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:1:p:112-134 Template-Type: ReDIF-Article 1.0 Author-Name: Kwame Osei-Assibey Author-X-Name-First: Kwame Author-X-Name-Last: Osei-Assibey Title: Exchange Rate Volatility, Earnings Uncertainty and Bidirectional Trade Flows: Empirical Evidence on Ghana Abstract: Although the empirical findings on the impact of exchange rate volatility on trade is diverse, the growing consensus in the literature appears to suggest that for developing economies, the theoretically expected negative relationship almost always exists. The paper takes a different approach to empirically assess this relationship by analysing the impact of exchange rate volatility independently on total trade, imports and exports. The intuition behind this approach is to assess exactly how exporters and importers are incentivised (differently or similarly) by exchange rate volatility costs. Whereas adequately risk-aversed Ghanaian exporters in the presence of higher exchange rate volatility and the absence of hedging facilities effectively compensated against exchange rate risk by increasing volume of exports, import decisions were to some extent (although not effectively) negatively affected by exchange rate volatility. The different responses by Ghanaian exporters and importers to higher exchange rate volatility costs are reflected in the relationship between volatility and total trade. The useful policy lessons and the challenges that the empirical evidence present are discussed. Journal: International Economic Journal Pages: 135-157 Issue: 1 Volume: 31 Year: 2017 Month: 1 X-DOI: 10.1080/10168737.2016.1271994 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1271994 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:1:p:135-157 Template-Type: ReDIF-Article 1.0 Author-Name: Abhijit Sen Gupta Author-X-Name-First: Abhijit Author-X-Name-Last: Sen Gupta Author-Name: Pragya Atri Author-X-Name-First: Pragya Author-X-Name-Last: Atri Title: Does Financial Sector Development Augment Cross-Border Capital Flows? Abstract: The sharp increase in volatility of capital flows in recent years has resulted in many countries altering the regulations governing the flow of foreign capital only to find such changes having a limited impact. We postulate that one reason for the limited effectiveness of such changes in regulations is the level of financial sector development in the country. As a country enhances its level of financial sector development, it also develops more and more sophisticated financial instruments. The more advanced the domestic financial instruments are, and the deeper is the integration of the domestic financial markets with the world markets, the greater is the likelihood of developing strategies to bypass capital account management measures. In this paper, we use various empirical techniques to identify the impact of financial sector development on capital flows, after accounting for regulatory regime. The empirical results indicate that there is a threshold effect in the financial sector development capital flow relationship. In particular, financial sector development augments greater integration with global capital flows only above a threshold level. Below the threshold level we find financial development reduces the extent of integration with global capital markets. Journal: International Economic Journal Pages: 499-523 Issue: 4 Volume: 32 Year: 2018 Month: 10 X-DOI: 10.1080/10168737.2018.1530690 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1530690 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:4:p:499-523 Template-Type: ReDIF-Article 1.0 Author-Name: Tarchoun Monaem Author-X-Name-First: Tarchoun Author-X-Name-Last: Monaem Author-Name: Ghraieb Ikram Author-X-Name-First: Ghraieb Author-X-Name-Last: Ikram Title: Measuring of International Financial Integration with a Multicriteria Decision Aid Approach Abstract: Despite the diversity of advanced approaches, the concept of ‘financial integration’ couldn’t be explicitly analyzed. Indeed, empirical studies have shown that the measures of international financial integration are one-dimensional analysis. Due to the ambiguity of the concept and its multiple determinants, it must be analyzed in multidimensional levels. The interest of this research is a proposal of a decision aid by a multicriteria approach (ELECTRE TRI) for determining the ranking of 47 countries according to the links between their degree of international and financial dependencies and the behavior of financial actors (trying to make governance decisions or diversification strategies of international portfolio).Abbreviations: MCDA – Multi-Criteria Decision Approach Journal: International Economic Journal Pages: 524-546 Issue: 4 Volume: 32 Year: 2018 Month: 10 X-DOI: 10.1080/10168737.2018.1530691 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1530691 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:4:p:524-546 Template-Type: ReDIF-Article 1.0 Author-Name: Enkhzaya Demid Author-X-Name-First: Enkhzaya Author-X-Name-Last: Demid Title: Fiscal and Monetary Policy: Coordination or Conflict? Abstract: This paper examines the interaction between monetary and fiscal policies. Using annual panel data covering the period from 1991 to 2016 for 42 countries, it characterizes the cyclical behavior of monetary and fiscal policy, distinguishing countries by institutional characteristics and policy frameworks. It also applies heterogeneous structural panel VAR methodology to quarterly data from a subset of these countries to assess the response to aggregate demand shocks. The main finding is that central bank independence and inflation targeting are associated with more countercyclical monetary and fiscal policies and an increased degree of coordination between the two. Journal: International Economic Journal Pages: 547-571 Issue: 4 Volume: 32 Year: 2018 Month: 10 X-DOI: 10.1080/10168737.2018.1534133 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1534133 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:4:p:547-571 Template-Type: ReDIF-Article 1.0 Author-Name: Amarendra Sharma Author-X-Name-First: Amarendra Author-X-Name-Last: Sharma Author-Name: Oscar Cardenas Author-X-Name-First: Oscar Author-X-Name-Last: Cardenas Title: The Labor Market Effects of FDI: A Panel Data Evidence from Mexico Abstract: This paper explores the effects of Foreign Direct Investment (FDI) inflows on six labor market outcomes by using a panel data of the Mexican states from 2005 to 2015. By relying on the system Generalized Method of Moments estimator to address potential endogeneity of FDI in the labor market outcomes regressions, this study finds that the FDI inflows result in a reduction in the overall unemployment rate. Moreover, the FDI is associated with a decrease in the percentage of employed people with the need and availability to offer more working hours and an increase in the median hourly wage rate. The FDI is not likely to influence the critical employment, informal sector employment, and unemployment duration. Journal: International Economic Journal Pages: 572-588 Issue: 4 Volume: 32 Year: 2018 Month: 10 X-DOI: 10.1080/10168737.2018.1547322 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1547322 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:4:p:572-588 Template-Type: ReDIF-Article 1.0 Author-Name: Marwa Sahnoun Author-X-Name-First: Marwa Author-X-Name-Last: Sahnoun Author-Name: Chokri Abdennadher Author-X-Name-First: Chokri Author-X-Name-Last: Abdennadher Title: The Efficiency of Active Labor Market Policies: A Comparative Analysis of Tunisia and OECD Countries’ Abstract: This article is timely to evaluate Active Labor Market Policies (ALMPs) in Tunisia in 7 regions throughout the period from 2005 to 2014 with reference to OECD countries. Massive unemployment in Tunisia resisted during this period (15,3% in 2014), followed by major changes after the transition period. In order to study the efficiency levels achieved by the Tunisian Active Labor Market Policies, we propose a parametric method, namely the Stochastic Frontier Approach ‘SFA’. Our results show that the total ALMPs significantly affects the unemployment rate. Thus, the average efficiency score of ALMP in Tunisia (0,94) is lower than that of the OECD countries (0,97). The divergence is due to structural and cyclical differences, which highlights the imperative to adopt a model adequate to the specificity of Tunisia. Tunisian public employment service policies have been shown to be insignificant compared to those of OECD countries. Start-up incentives seem to be the most effective policy to reduce the unemployment rate in the OECD countries’ and Tunisia because of its low cost. Journal: International Economic Journal Pages: 589-609 Issue: 4 Volume: 32 Year: 2018 Month: 10 X-DOI: 10.1080/10168737.2018.1548633 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1548633 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:4:p:589-609 Template-Type: ReDIF-Article 1.0 Author-Name: Uchenna Efobi Author-X-Name-First: Uchenna Author-X-Name-Last: Efobi Author-Name: Simplice Asongu Author-X-Name-First: Simplice Author-X-Name-Last: Asongu Author-Name: Ibukun Beecroft Author-X-Name-First: Ibukun Author-X-Name-Last: Beecroft Title: Aid, Terrorism, and Foreign Direct Investment: Empirical Insight Conditioned on Corruption Control Abstract: This paper checks the effect of foreign aid on terrorism–foreign direct investment (FDI) nexus, while considering the extent of domestic corruption control (CC). The empirical evidence is based on a sample of 78 developing countries. The following findings were established: the negative effect of terrorism on FDI is apparent only in countries with higher levels of CC; foreign aid dampens the negative effect of terrorism on FDI only in countries with high level of CC. Also, the result is mixed when foreign aid is subdivided into its bilateral and multilateral components. While our findings are in accordance with the stance that bilateral aid is effective in reducing the adverse effect of terrorism on FDI, we find that multilateral aid also decreases the adverse effect of other forms of terrorism that can neither be classified as domestic or transnational. Policy implications are discussed in the paper. Journal: International Economic Journal Pages: 610-630 Issue: 4 Volume: 32 Year: 2018 Month: 10 X-DOI: 10.1080/10168737.2018.1549089 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1549089 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:4:p:610-630 Template-Type: ReDIF-Article 1.0 Author-Name: Andrei G. Shulgin Author-X-Name-First: Andrei G. Author-X-Name-Last: Shulgin Title: Monetary Regime Choice and Optimal Credit Rationing at the Official Rate: The Case of Russia Abstract: Stabilizing monetary policy in a small open economy is constrained by the open economy trilemma. In this paper, we investigate whether foreign exchange market interventions and the Central Bank’s credit rationing at the official rate (CROR) may soften this constraint and improve the results of monetary policy for different monetary regimes. We construct a dynamic stochastic general equilibrium (DSGE) model appropriate for analyzing the forward-looking behavior of households facing non-zero probabilities of losing access to financial market and CROR. We have found significant credit rationing in the quarterly Russian data of 2001:Q1–2014:Q2. The probability of losing access to financial market and the probability of CROR are estimated as 22% and 66%, respectively. Using Russian data of 2001:Q1–2014:Q2 we demonstrate that CROR provoked forward-looking activity in financial market, which led to more Ruble devaluation in the crises of 2008–2009. It improved poor countercyclical performance of two Russian monetary policy rules, whereas made small effect on welfare. Welfare maximization exercises reveal a tradeoff between low-inflation and high-welfare solutions and favor of a floating exchange rate regime. We found the optimal value of the probability of CROR in both exchange rate-based and Taylor rule-based models but resulting improvement in welfare is very small. Journal: International Economic Journal Pages: 631-668 Issue: 4 Volume: 32 Year: 2018 Month: 10 X-DOI: 10.1080/10168737.2018.1561738 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1561738 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:4:p:631-668 Template-Type: ReDIF-Article 1.0 Author-Name: Magda Kandil Author-X-Name-First: Magda Author-X-Name-Last: Kandil Title: Determinants and Implications of Cyclicality: Contrasting Evidence Across Developed and Developing Countries Abstract: Using data for a sample of advanced and developing countries, the paper studies variation in the effects of aggregate demand shocks on the macro-economy and distinguish between the effects of expansionary and contractionary shocks. The aim is to study the determinants and implications of cyclicality across representative countries in each group. The composite evidence points to high degree of cyclicality in many countries. The risk of cyclicality is higher in developing countries as high trend inflation limits the scope to mobilize growth and increases downward rigidity of prices. Policy priorities in developing countries should be focused on fighting inflation and improving the investment environment towards maximizing the return on investment and sustaining growth and capacity building. Policy priorities in advanced countries should be focused on mobilizing resources to ease capacity constraints and finance larger investment, with limited crowding out, to maximize the potential of real growth and combat inflationary pressures. Journal: International Economic Journal Pages: 669-697 Issue: 4 Volume: 32 Year: 2018 Month: 10 X-DOI: 10.1080/10168737.2018.1561739 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1561739 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:4:p:669-697 Template-Type: ReDIF-Article 1.0 Author-Name: Ashima Goyal Author-X-Name-First: Ashima Author-X-Name-Last: Goyal Author-Name: Vaishnavi Sharma Author-X-Name-First: Vaishnavi Author-X-Name-Last: Sharma Title: Portfolio Composition and Valuation Effects in Emerging Market Economies Abstract: The increase in cross-border assets and liabilities of nations with globalization, implies small asset price and currency movements create large wealth changes. The national net external position is increasingly driven by valuation effects, which the current account does not capture. We analyze valuation effects for a group of seven emerging economies, namely Brazil, Colombia, India, Republic of Korea, Mexico, Peru and Turkey for the time period 2005:Q1-2015:Q4 by scrutinizing their external asset portfolio while controlling for country fundamentals. Both asset and liability categories of Direct Investment equity are found to positively impact valuation. Equity liabilities and debt assets of Portfolio Investment positively influence valuation. Debt liabilities of all kinds of investment negatively impact valuation. Countries with stronger currency tend to gain through valuation effects. An appreciated real effective exchange rate is associated with higher valuation gains. We also found non-linear effects of the composition of external debt portfolio by interacting external portfolio and country characteristics. The external portfolio selection of emerging economies (with more in Direct Investment equity liabilities and Portfolio Investment debt assets) in the period has shielded them from global volatility, and enabled valuation gains. Journal: International Economic Journal Pages: 307-330 Issue: 3 Volume: 32 Year: 2018 Month: 7 X-DOI: 10.1080/10168737.2018.1517814 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1517814 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:3:p:307-330 Template-Type: ReDIF-Article 1.0 Author-Name: Carlos A. Medel Author-X-Name-First: Carlos A. Author-X-Name-Last: Medel Title: Forecasting Inflation with the Hybrid New Keynesian Phillips Curve: A Compact-Scale Global VAR Approach Abstract: In this article, the multihorizon predictive power of the Hybrid New Keynesian Phillips Curve (HNKPC) is analysed by making use of several close- and open-economy specifications for the headline inflation of six developed countries. The key element is the use of direct measures of inflation expectations – Consensus Forecast – embedded in a compact-scale Global VAR (GVAR) environment, becoming the baseline open-economy HNKPC (OE-HNKPC) specification. These OE-HNKPC point forecasts are evaluated using the Root Mean Squared Forecast Error (RMSFE) statistic and statistically compared with several benchmarks, including traditional atheoretical models. Several OE-HNKPC as well as a closed-economy HNKPC (CE-HNKPC) specifications are also analysed. The results indicate that in four out of six countries, the CE-HNKPC is the best forecasting model, whereas for the same countries, a parsimonious OE-HNKPC is the second-best alternative, and in most cases, outperforming traditional statistical benchmarks. The RMSFE is obviously affected by the unanticipated effects of the Great Financial Crisis (GFC), spoiling out the performance of a number of competing forecasts. However, when considering an evaluation sample just before the crisis, both the CE-HNKPC and the parsimonious OE-HNKPC still come out as the best forecasting models. Furthermore, these preferred models also do an excellent job tracking inflation better than the best atheoretical models during the GFC. Journal: International Economic Journal Pages: 331-371 Issue: 3 Volume: 32 Year: 2018 Month: 7 X-DOI: 10.1080/10168737.2018.1501589 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1501589 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:3:p:331-371 Template-Type: ReDIF-Article 1.0 Author-Name: Sena Kimm Gnangnon Author-X-Name-First: Sena Kimm Author-X-Name-Last: Gnangnon Title: Export Product Diversification and Public Revenue’s Dependence on Resource Revenue Abstract: This article tries to reconcile two major priorities for countries, notably resource-rich countries on the international development agenda: export product diversification with a view to helping them better integrate into the multilateral trading system and tax reforms with a view to reducing the dependence of total public revenue on resource revenue, and therefore developing a more sustainable stream of public revenue. The analysis therefore involves examining empirically the impact of export product diversification on countries’ overall public revenue dependence on resource revenue, this dependence being measured by the share of resource revenue in total public revenue. The empirical analysis shows that export product diversification exerts a negative and significant impact on resource revenue share of total public revenue, and therefore could help facilitate tax reforms towards lower resource revenue dependence. Hence, while tax policy is the main policy tool to conduct tax reforms, export product diversification would likely contribute to facilitating the implementation of these reforms. Journal: International Economic Journal Pages: 372-391 Issue: 3 Volume: 32 Year: 2018 Month: 7 X-DOI: 10.1080/10168737.2018.1521459 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1521459 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:3:p:372-391 Template-Type: ReDIF-Article 1.0 Author-Name: Yaseen Ghulam Author-X-Name-First: Yaseen Author-X-Name-Last: Ghulam Title: Is It a Few Days of Good Times and then Darkness Ensues? Long-Term Performance of an Industry after Broad Reforms and Privatisation Abstract: The long-run financial performances of privatised firms have rarely been investigated. This study examines the financial and operational performance within the Pakistani cement industry utilising two decades of post-privatisation data. Broadly speaking, regression analyses confirm that long-term positive impacts of reforms and privatisation on profitability, output and investment are uncertain. After controlling for firm, industry and economic factors, our estimates show that privatised firms initially improved their profitability but recorded a statistically significant decline over a longer period. The sale efficiency, capacity utilisation, and leverage indicators, however, improved over a considerably long post-ownership change period. Journal: International Economic Journal Pages: 392-417 Issue: 3 Volume: 32 Year: 2018 Month: 7 X-DOI: 10.1080/10168737.2018.1485047 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1485047 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:3:p:392-417 Template-Type: ReDIF-Article 1.0 Author-Name: Konstantin Borodin Author-X-Name-First: Konstantin Author-X-Name-Last: Borodin Author-Name: Sergei Salnikov Author-X-Name-First: Sergei Author-X-Name-Last: Salnikov Title: Development of Sunflower Oil Exports in Russia and the EEU: Main Trends, Prospects, and Evaluations by the Gravity Model Abstract: The purpose of this paper is to assess the major trends, factors, and prospects of development of Russian and EEU sunflower oil exports. The sanctions resulted in an increase of sunflower oil exports in 2014 to a peak value, which allowed the producers to accumulate revenues in hard currency. The gravity models findings for Russia and for the EEU show that the sanctions stimulated the growth of sunflower oil exports. As distinct from a common language, a common border also encourages the development of Eurasian exports to third countries. The tariff size in the importer country is strongly and negatively connected with exports both from Russia and from the EEU. The effect of regional integration within the EEU is insignificant for the development of sunflower oil exports, while regional integration processes in the CIS have a positive impact on exports. Journal: International Economic Journal Pages: 418-437 Issue: 3 Volume: 32 Year: 2018 Month: 7 X-DOI: 10.1080/10168737.2018.1520280 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1520280 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:3:p:418-437 Template-Type: ReDIF-Article 1.0 Author-Name: Thang Ngoc Bach Author-X-Name-First: Thang Ngoc Author-X-Name-Last: Bach Title: Trade-related R&D Spillovers in Vietnamese Manufacturing Abstract: This study aims to examine how Vietnamese manufacturing could benefit from R&D investment locally and from OECD countries through trade during a period marked with major trade liberalisations. Using the industry-level data during 2000–2009, it finds that the foreign R&D has accounted for the most part of the R&D spillovers in the sector, with a larger proportion earning from the other foreign industries’ R&D. The domestic industries’ own R&D has improved the sector’s total factor productivity, but in a relatively smaller magnitude compared to the foreign sources. In examining the localised effects of R&D spillovers in Vietnamese manufacturing, the results reiterate the important roles of trade-embedded foreign R&D spillovers from Japan, the US, South Korea, and Germany in the sector’s total factor productivity growth. These findings altogether give support to foreign technology diffusion as a major conduit for growth prospects in Vietnamese manufactures. Journal: International Economic Journal Pages: 438-453 Issue: 3 Volume: 32 Year: 2018 Month: 7 X-DOI: 10.1080/10168737.2018.1485046 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1485046 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:3:p:438-453 Template-Type: ReDIF-Article 1.0 Author-Name: Yousra Trichilli Author-X-Name-First: Yousra Author-X-Name-Last: Trichilli Author-Name: Mouna Abdelhédi Author-X-Name-First: Mouna Author-X-Name-Last: Abdelhédi Author-Name: Mouna Boujelbène Abbes Author-X-Name-First: Mouna Author-X-Name-Last: Boujelbène Abbes Title: Googling Investor’s Sentiment: Powerful Measure in Conventional and Islamic MENA Financial Markets Abstract: The objective of this paper is to investigate whether investors' sentiment measured by the Internet search behavior constitutes a valid measure of investor’s sentiment on Islamic and conventional indexes of emerging and frontier financial markets in MENA countries. In fact, we examine the relation between googling investor’s sentiment and monthly Islamic and conventional index returns during the period 2004–2016. Using the Dynamic Conditional Correlation, the BEKK-GARCH and the wavelet coherence models, we confirm that googling investor’s sentiment is a perfect indicator of investor’s sentiment measure. Indeed, we find that this measure has the ability to reflect major events such as subprime financial crisis, oil crisis and Arab spring revolution affecting MENA Islamic and conventional index markets. Our finding indicates that investors can use googling investor’s sentiment as an indicator to predict returns and volatility of emerging and frontier markets since it reflects the behavior and emotions of investors in MENA financial markets. Journal: International Economic Journal Pages: 454-469 Issue: 3 Volume: 32 Year: 2018 Month: 7 X-DOI: 10.1080/10168737.2018.1522055 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1522055 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:3:p:454-469 Template-Type: ReDIF-Article 1.0 Author-Name: Michel Cyrille Samba Author-X-Name-First: Michel Cyrille Author-X-Name-Last: Samba Title: Exchange Market Pressure in the Central African Economic and Monetary Community (CAEMC) Area: Empirical Assessment of the Macroeconomic Determinants Abstract: The current empirical study contributes to the literature on the exchange market pressure. First we construct as proposed by Eichengreen, Rose, and Wyplosz [1996. Contagious currency crises: First tests. The Scandinavian Journal of Economics, 98 (4), 463–484], a continuous measure of EMP for the CAEMC franc zone, using quarterly data from 1985Q1 to 2012Q2. We then address the main macroeconomic determinants of this EMP.We find that our main measure for EMP as well as two alternative measures of this index captures quite well episodes of crises of the CFA (XAF) currency. During the period of study, the common currency of the CAEMC countries experienced about four speculative attacks, with the one in 1993 ending with the devaluation of that currency in January 1994. The other attacks were warded off through reserves losses, as it is clear that the currency peg was maintained principally through changes in reserves. We also find that the GDP growth, the trade balance and the international oil price are the main contributors of EMP and therefore the most significant predictors of currency crises in the CAEMC area. Journal: International Economic Journal Pages: 470-482 Issue: 3 Volume: 32 Year: 2018 Month: 7 X-DOI: 10.1080/10168737.2018.1523213 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1523213 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:3:p:470-482 Template-Type: ReDIF-Article 1.0 Author-Name: Kais Saidi Author-X-Name-First: Kais Author-X-Name-Last: Saidi Title: Foreign Direct Investment, Financial Development and Their Impact on the GDP Growth in Low-income Countries Abstract: This essay empirically studies the effects and causal links between foreign direct investment (FDI), financial development (FD) and economic growth. The sample consists of the main economies of low-income countries and the study covers the period 1990–2015. The results of the estimate show that, under certain specific economic conditions, FDI affects positively the level of long-term economic growth; it thus makes it possible to improve the economic situation of these countries. Using Johansen’s cointegration technique, the results find that FD; FDI and GDP growth are cointegrated, that shows the pursuit of the long-term equilibrium relationship between them. The error correction model confirms the existence of a double causal relationship between FDI and GDP growth, and between FD and FDI and between GDP growth and FD. Journal: International Economic Journal Pages: 483-497 Issue: 3 Volume: 32 Year: 2018 Month: 7 X-DOI: 10.1080/10168737.2018.1529813 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1529813 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:3:p:483-497 Template-Type: ReDIF-Article 1.0 Author-Name: Katsuya Ito Author-X-Name-First: Katsuya Author-X-Name-Last: Ito Title: Remittances and the Dutch Disease: Evidence from Panel Data for 18 Developing Countries Abstract: In this paper, using the GMM technique we attempt to empirically investigate the Dutch disease effect of remittances. The analyses are based on an annual balanced panel data set for 18 developing countries, which have remittances to GDP ratio of 5 percent and above, over the years 1999–2015. It is found that an inflow of remittances has a positive effect on economic growth, whereas it leads to a depreciation of the real effective exchange rate. Journal: International Economic Journal Pages: 1-8 Issue: 1 Volume: 33 Year: 2019 Month: 1 X-DOI: 10.1080/10168737.2019.1569709 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1569709 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:1:p:1-8 Template-Type: ReDIF-Article 1.0 Author-Name: Md. Sadik Pavel Author-X-Name-First: Md. Sadik Author-X-Name-Last: Pavel Author-Name: Seikh Ruksana Burhan Author-X-Name-First: Seikh Ruksana Author-X-Name-Last: Burhan Author-Name: Tanim Papiya Author-X-Name-First: Tanim Author-X-Name-Last: Papiya Title: Should Bangladesh Export to Countries with Better Institutional or Comparatively Similar Institutional Form? Abstract: Using panel data for the years 2006–2015, this study empirically investigates the effect of rule of law as an institution on Bangladesh's exports to 28 European Union countries (EU28) based on gravity model analysis. Two-step econometric results suggest that institutional rule of law is strongly associated with Bangladesh's exports, and institutional quality provides evidence of this significant effect. Furthermore, exports of Bangladesh are driven by economic size, market size, and the real exchange rate as well as rule of law. These results are suggestive of an important joint role for both trade and institutions in the long run. Journal: International Economic Journal Pages: 9-26 Issue: 1 Volume: 33 Year: 2019 Month: 1 X-DOI: 10.1080/10168737.2019.1570299 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1570299 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:1:p:9-26 Template-Type: ReDIF-Article 1.0 Author-Name: Frederick Dongchuhl Oh Author-X-Name-First: Frederick Dongchuhl Author-X-Name-Last: Oh Author-Name: Heejin Yoon Author-X-Name-First: Heejin Author-X-Name-Last: Yoon Title: The Role of Chonsei as a Price Protector in the Korean Housing Market Abstract: In this study, we investigate whether ‘Chonsei,’ the distinctive type of housing contract system in Korea, has a favorable impact on house prices during a market downturn. We show the mechanism in which Chonsei prevents a sharp drop in house prices based on sellers’ loss aversion behavior. Moreover, using data on the Seoul condominium (i.e. apartment) market during the 2006–2017 period, we find that Chonsei prices have a negative impact on the housing trade volume in a market recession. This finding is consistent with our argument that loss aversion behavior appears with regard to the rise in Chonsei prices and thereby Chonsei functions as a price protector in the Korean housing market. Journal: International Economic Journal Pages: 27-41 Issue: 1 Volume: 33 Year: 2019 Month: 1 X-DOI: 10.1080/10168737.2019.1570300 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1570300 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:1:p:27-41 Template-Type: ReDIF-Article 1.0 Author-Name: Gan-Ochir Doojav Author-X-Name-First: Gan-Ochir Author-X-Name-Last: Doojav Author-Name: Davaajargal Luvsannyam Author-X-Name-First: Davaajargal Author-X-Name-Last: Luvsannyam Title: External Shocks and Business Cycle Fluctuations in Mongolia: Evidence from a Large Bayesian VAR Abstract: This paper examines macroeconomic effects of external shocks and their transmission mechanisms in one of the most commodity-abundant countries-Mongolia using a large Bayesian vector autoregression (BVAR) based on the approach proposed by Bańbura, Giannone, and Reichlin [(2010). Large Bayesian Vector Auto Regressions. Journal of Applied Econometrics, 25, 71–92]. Nine structural shocks (five external and four domestic shocks) are identified using a recursive ordering. Results show that external shocks are important sources of macroeconomic volatility in Mongolia. Commodity price shocks affect the economy through exchange rate and budget expenditure channels, while China’s growth and FDI shocks are primarily transmitted through the real sector and bank lending channels. Journal: International Economic Journal Pages: 42-64 Issue: 1 Volume: 33 Year: 2019 Month: 1 X-DOI: 10.1080/10168737.2019.1570301 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1570301 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:1:p:42-64 Template-Type: ReDIF-Article 1.0 Author-Name: Samson Adeniyi Aladejare Author-X-Name-First: Samson Adeniyi Author-X-Name-Last: Aladejare Title: Testing the Robustness of Public Spending Determinants on Public Spending Decisions in Nigeria Abstract: This study tests the robustness of variables used in determining public spending in Nigeria from 1970 to 2016. This is achieved through the simultaneous use of a symmetric and asymmetric ARDL and Toda–Yamamoto causality procedures. The empirical findings reveal sufficient evidence of asymmetry in the behaviour of policy variables such as oil price, inflation rate, and the exchange rate. Hence, the conclusion that asymmetry significantly exists in key variables, used by Nigerian fiscal authorities for spending decision-making. Also, the asymmetric Toda–Yamamoto causality result reveals that increase in oil price, depreciation in the Naira value, and government revenue are the key determinants of public spending. Hence, the revenue-spend hypothesis. It is recommended that the re-investment of surplus proceeds from oil receipts should be given much priority. Specifically, the re-investment of such revenues into sectors such as manufacturing, construction, and information technology, will speed-up the diversification process of the revenue base; and sufficiently reduce the negative effects a decline in the oil price, and the Naira exchange rate will have on public spending. The policy of inflation targeting by the monetary authority should be sustained to check unwarranted inflationary trajectory; which may have an adverse effect on public spending value. Journal: International Economic Journal Pages: 65-87 Issue: 1 Volume: 33 Year: 2019 Month: 1 X-DOI: 10.1080/10168737.2019.1570302 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1570302 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:1:p:65-87 Template-Type: ReDIF-Article 1.0 Author-Name: Linh T.D. Huynh Author-X-Name-First: Linh T.D. Author-X-Name-Last: Huynh Author-Name: Hien Thanh Hoang Author-X-Name-First: Hien Thanh Author-X-Name-Last: Hoang Title: Effects of exchange rate volatility on bilateral import performance of Vietnam: A dynamic Generalised method of Moments panel approach Abstract: The paper examines to what extent exchange rate volatility affects Vietnam’s bilateral import value. The two-step system generalized method of moments (GMM) was employed on panel data over a 10-year period. Exchange rate volatility was generated by two measures, including generalised autoregressive conditional heteroskedastic (GARCH) and moving standard deviation (MOVSD). A variety of diagnostic tests which ensure the consistency of GMM estimates were discussed. The main findings confirm that all explanatory variables demonstrated the expected signs, and exchange rate volatility has positive impacts on Vietnam's import flows. However, there is a large overall difference between the results produced with those two volatility measures. Journal: International Economic Journal Pages: 88-110 Issue: 1 Volume: 33 Year: 2019 Month: 1 X-DOI: 10.1080/10168737.2019.1571525 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1571525 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:1:p:88-110 Template-Type: ReDIF-Article 1.0 Author-Name: John Gerard Cozier Author-X-Name-First: John Gerard Author-X-Name-Last: Cozier Author-Name: Patrick Kent Watson Author-X-Name-First: Patrick Kent Author-X-Name-Last: Watson Title: Co-movement in Stock Prices in Emerging Economies: The Case of the Caricom Region Abstract: The Grand Anse Declaration of 1989 recognised the need for financial integration within the emerging economies that comprise the CARICOM region, as a way of furthering the wider process of economic integration and, indeed, economic development in that region. Using co-movement as a measure of financial integration, this paper investigates the co-movement in stock prices among the Barbados, the Jamaica and the Trinidad and Tobago Stock Exchanges, the three major exchanges within the CARICOM region. It also examines how integrated these exchanges are with the New York Stock Exchange. The GARCH-Copula methodology and, to a lesser extent, estimated correlation coefficients, are used to attain this objective. There appears to be co-movement in stock prices and returns within the CARICOM stock markets and significant dependence structures between the returns of the three CARICOM stock markets. However, there is considerably less evidence of integration between the CARICOM markets and the New York Stock Exchange. Journal: International Economic Journal Pages: 111-127 Issue: 1 Volume: 33 Year: 2019 Month: 1 X-DOI: 10.1080/10168737.2019.1573265 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1573265 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:1:p:111-127 Template-Type: ReDIF-Article 1.0 Author-Name: Cephas Naanwaab Author-X-Name-First: Cephas Author-X-Name-Last: Naanwaab Author-Name: Johnson Antwi Author-X-Name-First: Johnson Author-X-Name-Last: Antwi Title: International Integration, Trade, and the Great Recession Abstract: In the wake of the Great Recession, almost all countries suffered a severe and synchronized trade collapse unlike any seen since the Great Depression. To the extent that economic integration fosters trade among countries, this paper examines the role that international integration played in moderating the negative shock caused by the Great Recession on trade. The methodology adopted is a modified gravity model in which we control for the Great Recession, different forms of integration, as well as the interaction between integration and the recession. Measuring integration in three different ways, the findings show that countries that were more integrated fared better in trade – the extent of trade collapse was milder – than less integrated countries. Specifically, Regional Trade Agreement, as a form of trade integration, had a positive and robust effect on trade during the Great Recession. This positive effect is also robust across regions and countries around the world. In a nutshell, countries that are into some form of trade agreements are better-positioned to absorb negative demand-side shocks caused by economic recessions than similar countries without such agreements. Journal: International Economic Journal Pages: 128-148 Issue: 1 Volume: 33 Year: 2019 Month: 1 X-DOI: 10.1080/10168737.2019.1581245 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1581245 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:1:p:128-148 Template-Type: ReDIF-Article 1.0 Author-Name: Khoutem Ben Jedidia Author-X-Name-First: Khoutem Ben Author-X-Name-Last: Jedidia Author-Name: Thouraya Boujelbene Dammak Author-X-Name-First: Thouraya Boujelbene Author-X-Name-Last: Dammak Author-Name: Helali Kamel Author-X-Name-First: Helali Author-X-Name-Last: Kamel Title: Trade-threshold Effect on Inflation in Tunisia: New Evidence Resulting from a Nonlinear Approach Abstract: Trade openness is an important determinant of the inflation process. The effect of trade openness on inflation, however, is still an issue of debate at both theoretical and empirical levels. This study tried to provide a contribution to the literature by examining the relationship between inflation and trade openness in Tunisia over the period 1975Q1-2015Q4 using a nonlinear model. The originality of this study stems from the fact that it is the first investigation considering both the Residual-Based Tests for Cointegration in Models with the Regime Shifts and Threshold Regression model. The linear model confirms the existence of a positive relationship between inflation and trade in Tunisia. Yet, considering the nonlinear model, trade openness growth and Consumer Price Index (CPI) inflation growth show a statistically significant negative link as long as the trade openness evolution does not exceed the threshold. Nevertheless, if the trade openness growth is higher than the threshold, integrating the trade positively affects CPI inflation. Furthermore, a positive influence of Money supply growth on this type of inflation was noticed in Tunisia in all the considered regimes proving the effect of monetary factors on inflation level. Consequently, trade openness could be used to control inflation in Tunisia. Journal: International Economic Journal Pages: 149-169 Issue: 1 Volume: 33 Year: 2019 Month: 1 X-DOI: 10.1080/10168737.2019.1581246 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1581246 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:1:p:149-169 Template-Type: ReDIF-Article 1.0 Author-Name: Yang Seung Lee Author-X-Name-First: Yang Seung Author-X-Name-Last: Lee Title: Factor Heterogeneity, Factor Market Imperfection and Trade Abstract: This paper develops a tractable model of examining how factor heterogeneity and imperfect factor market interact for determining a pattern of trade. Institution plays a crucial role for the interaction. In my work, firm productivity is defined as a composition of factor productivity and technology. Thus, input selection should affect the pattern of Melitz’s intra-industry allocation due to the incurring transaction cost. For a simple model, I assume two factors (labor and capital) and two sectors, which are relatively less institution-dependent and relatively more institution-dependent. When the economy is open, effect of the transaction cost on income distribution is more drastic for an institutionally underdeveloped country. Depending on institutional quality, the economic openness reallocates resource across countries through job creation or job destruction. The job turnovers redistribute income between heterogeneous labors within countries. The income redistribution is catalyzed by international mobility of capital. As a result, income disparity is widened between the institutionally developed country and the institutionally underdeveloped country. This paper can contribute to the literature of institution and international trade. Journal: International Economic Journal Pages: 170-188 Issue: 1 Volume: 33 Year: 2019 Month: 1 X-DOI: 10.1080/10168737.2019.1581825 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1581825 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:1:p:170-188 Template-Type: ReDIF-Article 1.0 Author-Name: Meeta Keswani Mehra Author-X-Name-First: Meeta Keswani Author-X-Name-Last: Mehra Author-Name: Deepti Kohli Author-X-Name-First: Deepti Author-X-Name-Last: Kohli Title: Environmental regulation and intra-industry trade Abstract: The paper analyses complex interactions between intra-industry trade (IIT) and environment by extending Krugman's model of monopolistic competition and trade. It is found that an increase in exogenous environmental tax by a country leads to a fall in its output (the scale effect) and aggregate pollution, and an increase in its number of varieties (the selection effect). With IIT, if Home is a net exporter, an increase in its environmental stringency leads to a negative scale effect, which reduces its export demand and raises its import demand. In contrast, a positive selection effect reduces its import demand. However, the first-order scale effect on exports dominates the second-order effect on imports, implying a rise in Home's share of IIT with Foreign. The opposite holds true when Home is a net importer. Furthermore, the impact of a rise in environmental tax on aggregate welfare comprises the following counteracting effects: a negative scale effect, a positive selection effect, a lower level of aggregate pollution and a higher environmental tax revenue in autarky, and two additional effects, namely, changes in the level of exports and imports, under free trade. The overall change in aggregate welfare, in both autarky and free trade, is in general ambiguous. Journal: International Economic Journal Pages: 133-160 Issue: 2 Volume: 32 Year: 2018 Month: 4 X-DOI: 10.1080/10168737.2018.1461914 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1461914 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:2:p:133-160 Template-Type: ReDIF-Article 1.0 Author-Name: Diego E. Vacaflores Author-X-Name-First: Diego E. Author-X-Name-Last: Vacaflores Title: Beyond Altruism and Self-interest: The Growing Importance of External Factors in the Determination of Remittances Flowing to Latin America Abstract: Remittances have become an important and reliable source of funds for many developing countries, affecting the well-being of its population and the performance of their economies. However, challenging conditions in the economies were migrant workers reside has unveiled the increasing importance of external factors in determining their ability to send money back home. This study relies on migration patterns to create migration and distance-weighted measures of external condition, and uses the Arellano and Bond dynamic panel methodology to gauge the relevance of these external macroeconomic conditions during the 1995–2015 period for a set of 18 Latin American countries. The results indicate that external conditions, irrespective of the way in which they are measured, have a positive and statistically significant effect on the amount of remittances flowing into the region, and that such effect go beyond differences in levels, as relative differences prove to be important as well. While the results also show that remittances are inversely related to the income level of receiving countries and that these flows respond positively to better economic performance and higher interest rates in the receiving country, such altruistic and self-interest factors are less consistent than the one found for foreign economic activity. Journal: International Economic Journal Pages: 235-255 Issue: 2 Volume: 32 Year: 2018 Month: 4 X-DOI: 10.1080/10168737.2018.1478867 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1478867 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:2:p:235-255 Template-Type: ReDIF-Article 1.0 Author-Name: Yhlas Sovbetov Author-X-Name-First: Yhlas Author-X-Name-Last: Sovbetov Title: Impact of Digital Economy on Female Employment: Evidence from Turkey Abstract: This paper investigates impact of e-economic activities on female employment rates in Turkey over 1994–2016. The analysis unveils three major findings. First, 80.74% of variations in female employment are accounted by e-commerce and control variables. Second, Autoregressive Distributed Lag analysis documents that these series (female employment, e-commerce and control variables) are cointegrated, thus, a unit increase in per credit card e-commerce transactions leads the female employment rate to grow by 0.13 units in long-run at 1% significance level, whereas a percentage increase in internet penetration rate in Turkey augments the rates by 0.33%. Third, error-correction model analysis refers that the system quickly corrects its previous period disequilibrium converging at a speed of 75.43%, and also documents that the lags of per credit card e-commerce jointly have short-run impact on female employment rates. Thus, the study concludes that developing e-commerce incentivizing policies might help to empower women in Turkey significantly. Journal: International Economic Journal Pages: 256-270 Issue: 2 Volume: 32 Year: 2018 Month: 4 X-DOI: 10.1080/10168737.2018.1478868 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1478868 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:2:p:256-270 Template-Type: ReDIF-Article 1.0 Author-Name: Aswini Kumar Mishra Author-X-Name-First: Aswini Kumar Author-X-Name-Last: Mishra Title: Household Income Inequality and Income Mobility: Implications Towards Equalizing Longer-Term Incomes in India Abstract: This paper addresses three important questions. First, what are the trends, levels and sources of income inequality in India? Second, how have been the patterns of income mobility? And finally, exploring the relationship between income mobility and income inequality in the context of India. Results, based on recent India Human Development Survey (IHDS) longitudinal data, advocate that not only is income inequality very high, nonetheless, it has increased – mainly attributable to different income sources – in India. The paper also focused on whether or not this income mobility equalizes longer-term incomes. Results suggest income mobility has resulted in-albeit not robust- equalizing longer-term incomes. Thus, based on imperative findings, the paper suggests, the nature of longer-term well-being is crucial to designing policy interventions to effectively tackle inequality and in this context, economic mobility can be seen as an avenue to long-term equality. Journal: International Economic Journal Pages: 271-290 Issue: 2 Volume: 32 Year: 2018 Month: 4 X-DOI: 10.1080/10168737.2018.1480640 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1480640 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:2:p:271-290 Template-Type: ReDIF-Article 1.0 Author-Name: Simplice A. Asongu Author-X-Name-First: Simplice A. Author-X-Name-Last: Asongu Author-Name: Oasis Kodila-Tedika Author-X-Name-First: Oasis Author-X-Name-Last: Kodila-Tedika Title: “This One Is 400 Libyan Dinars, This One Is 500”: Insights from Cognitive Human Capital and Slave Trade Abstract: One of the most disturbing contemporary episodes in human history that has been decried globally is the recent Libyan experience of slave trade, where migrants captured end-up being sold as slaves. We contribute to the understanding of this phenomenon by investigating the role of cognitive human capital on slave trade. To this end, we use the historic intelligence and slave trade variables, respectively, as the independent and outcome variables of interest. Our findings show a negative relationship between slave trade and cognitive human capital. Hence, the slave trade is more apparent when cognitive human capital is low. The Ordinary Least Squares findings are robust to the control for outliers, uncertainty about the model and Tobit regressions. We substantiate why from the perspective of massive sensitization and education, the non-contemporary relationship between cognitive ability and slave trade established in this study has contemporary practical policy relevance in efforts to stem the tide of clandestine travel to Europe through countries in which clandestine migrants are captured and sold as slaves. Journal: International Economic Journal Pages: 291-306 Issue: 2 Volume: 32 Year: 2018 Month: 4 X-DOI: 10.1080/10168737.2018.1480643 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1480643 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:2:p:291-306 Template-Type: ReDIF-Article 1.0 Author-Name: Apostolos Kiohos Author-X-Name-First: Apostolos Author-X-Name-Last: Kiohos Author-Name: Nikolaos Stoupos Author-X-Name-First: Nikolaos Author-X-Name-Last: Stoupos Title: Re-Exploring the Enlargement of the Eurozone: Evidence from the New Member-States Abstract: The debt crisis of the Euro Area in 2010 raised plenty of doubts concerning the sustainability of the monetary union. Eurozone includes economies which have different structural characteristics. This event does not allow the establishment of an optimal currency area. The present research attempts to explore if the join of Cyprus, Malta, Latvia, Slovenia and Slovakia in the Eurozone was in favor of their economies. We used the nominal exchange rates as a financial instrument by combing the Error Correction Model with the Threshold GARCH, ECM-TGARCH. The empirical findings highly support that the EU membership influenced positively the relationship between the euro and the Cypriot Pound, the Latvian Lats and the Slovenian Tolar. On the contrary, we discovered that the join of Malta in the EU had a slightly negative and a long-term impact in the relationship between the euro and the Maltese currency. Finally, the entrance of Slovakia in the EU influenced positively the Slovakian currency. However, the relationship between the euro and the Slovakian Koruna remained negative. Journal: International Economic Journal Pages: 177-198 Issue: 2 Volume: 32 Year: 2018 Month: 4 X-DOI: 10.1080/10168737.2018.1480646 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1480646 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:2:p:177-198 Template-Type: ReDIF-Article 1.0 Author-Name: Samson Adeniyi Aladejare Author-X-Name-First: Samson Adeniyi Author-X-Name-Last: Aladejare Title: Resource Price, Macroeconomic Distortions, and Public Outlay: Evidence from Oil-Exporting Countries Abstract: This study examines the repercussions of oil price and macroeconomic distortions on government expenditure in 15 oil-exporting countries. Adapting the Pooled Mean Group analytical approach, the long-run findings are indicative of a blend of the Dutch disease and rent-seeking hypothesis of the resource curse theory in oil-exporting countries. These effects crucially impact on the poor growth of the real sector in these countries, needed for diversification of their revenue base. Furthermore, both resource curses account for one of the reasons why fiscal deficits in oil-exporting countries have been on the rise. The country short-run coefficient for the balance of payment, economic growth, and exchange rate also supports the Dutch disease and rent-seeking hypothesis mix found in the long run. Also, the significant negative impact of oil rents in most countries shows that oil-exporting countries have been making attempts at diversifying their income sources; this is because proceeds from oil cannot be relied upon to adequately finance growing government expenditure, due to the volatile nature of oil prices, thus suggesting also that the volatility hypothesis is valid for most oil-exporting countries in the short run. Journal: International Economic Journal Pages: 199-218 Issue: 2 Volume: 32 Year: 2018 Month: 4 X-DOI: 10.1080/10168737.2018.1481128 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1481128 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:2:p:199-218 Template-Type: ReDIF-Article 1.0 Author-Name: Mohsen Bahmani-Oskooee Author-X-Name-First: Mohsen Author-X-Name-Last: Bahmani-Oskooee Author-Name: Majid Maki Nayeri Author-X-Name-First: Majid Maki Author-X-Name-Last: Nayeri Title: Policy Uncertainty and the Demand for Money in Korea: An Asymmetry Analysis Abstract: Previous studies included money supply volatility as well as output volatility as measures of uncertainty in estimating the demand for money. However, a more comprehensive measure of uncertainty is now constructed for many countries and is known as policy uncertainty. When we included this new measure in the formulation of the demand for money in Korea and relied upon a nonlinear specification of the money demand which allows us to assess the asymmetric effects of changes in the policy uncertainty measure, we found asymmetric long-run effects of policy uncertainty on the demand for cash in Korea. Our conjecture is that increased uncertainty induces Koreans to hold less cash in favor of safer assets and decreased uncertainty has opposite effects, though at different rate. Journal: International Economic Journal Pages: 219-234 Issue: 2 Volume: 32 Year: 2018 Month: 4 X-DOI: 10.1080/10168737.2018.1481129 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1481129 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:2:p:219-234 Template-Type: ReDIF-Article 1.0 Author-Name: Edmond Berisha Author-X-Name-First: Edmond Author-X-Name-Last: Berisha Author-Name: John Meszaros Author-X-Name-First: John Author-X-Name-Last: Meszaros Title: Household Debt, Consumption, and Income Inequality Abstract: Using the Johansen and Engle–Granger cointegration tests, we show that there is one cointegrating relationship between household debt, consumption, and income inequality in the United States for the period from 1929 to 2009. Given this result, we use a Vector Error-Correction model to further understand the dynamics among the three variables. Results indicate that increases in income inequality and consumption directly contribute to increases in household debt. Interestingly, the results reveal some feedback from household debt to income inequality. We also show that debt-driven consumption should be viewed with caution as the results show that increases in household debt correspond with future declines in the rate of consumption. Journal: International Economic Journal Pages: 161-176 Issue: 2 Volume: 32 Year: 2018 Month: 4 X-DOI: 10.1080/10168737.2018.1481874 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1481874 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:2:p:161-176 Template-Type: ReDIF-Article 1.0 Author-Name: Antonis Tsitouras Author-X-Name-First: Antonis Author-X-Name-Last: Tsitouras Title: What can Trigger the Resumption of Economic Growth in a Small Open Economy like Greece: Exports or Inward FDI? Abstract: The purpose of this article is to investigate the effect of exports and inward foreign direct investment (FDI) on economic development in Greece, in the long and short run, from 1980 to 2013. This study applies the Ng-Perron and DF-GLS unit root tests to determine the level of integration as well as the autoregressive distributed lag (ARDL) method to identify the long-run relationship. Our analysis confirms the long-run relationship between inward FDI, exports and national income. Our results imply that any policy by the Greek Government aimed at boosting economic development through exports will have to be considered for the long run since Greek authorities cannot rely on exports in the short run. However, inward FDI appears more efficient than exports as far as boosting economic progress in the short run. Journal: International Economic Journal Pages: 504-526 Issue: 4 Volume: 30 Year: 2016 Month: 10 X-DOI: 10.1080/10168737.2016.1151068 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1151068 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:4:p:504-526 Template-Type: ReDIF-Article 1.0 Author-Name: Bassem Kahouli Author-X-Name-First: Bassem Author-X-Name-Last: Kahouli Title: Regional Integration Agreements, Trade Flows and Economic Crisis: A Static and Dynamic Gravity Model Abstract: Regional trade agreements (RTA) strengthening is a crucial component of the contemporary global economy. These agreements are considered beneficial in many senses (economics: trade, FDI, growth, etc.) and are a stabilizing factor in international relations (politics). In this paper, I study the effects of RTAs on exports between members and non-members taking into account the Viner specification. I also try to estimate the effect of the recent economic crisis on the export flows and achievement of RTAs. I use a static and dynamic gravity model to 40 countries belonging to 6 heterogeneous RTAs for the period 1980–2011. This model is estimated taking into account the latest estimation techniques that treats endogeneity effects of integration and the existence of dynamic effect. Journal: International Economic Journal Pages: 450-475 Issue: 4 Volume: 30 Year: 2016 Month: 10 X-DOI: 10.1080/10168737.2016.1204338 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1204338 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:4:p:450-475 Template-Type: ReDIF-Article 1.0 Author-Name: Matteo Migheli Author-X-Name-First: Matteo Author-X-Name-Last: Migheli Title: Optimal Individual Decisions with a Psycho-materialistic Utility Function Abstract: This paper proposes a theoretical model aimed at interpreting the outcome of some games. It is often observed that players do not play the Nash equilibrium, when their utility is modelled on their payoff only. However, other models which include psychological variables fail to describe the behaviours observed. Here I propose a utility function which encompasses both monetary and psychological payoffs in such a way that the predictions fit the actual decisions of the players observed in experiments. Journal: International Economic Journal Pages: 476-487 Issue: 4 Volume: 30 Year: 2016 Month: 10 X-DOI: 10.1080/10168737.2016.1204339 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1204339 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:4:p:476-487 Template-Type: ReDIF-Article 1.0 Author-Name: Oasis Kodila-Tedika Author-X-Name-First: Oasis Author-X-Name-Last: Kodila-Tedika Author-Name: Simplice A. Asongu Author-X-Name-First: Simplice A. Author-X-Name-Last: Asongu Author-Name: Julio Mukendi Kayembe Author-X-Name-First: Julio Mukendi Author-X-Name-Last: Kayembe Title: Middle Class in Africa: Determinants and Consequences Abstract: This study complements the inclusive growth literature by examining the determinants and consequences of the middle class in a continent where economic growth has been relatively high. The empirical evidence is based on a sample of 33 African countries for a 2010 cross-sectional study. Ordinary least squares, two-stage-least squares, three-stage-least squares and seemingly unrelated regressions estimation techniques are employed to regress a plethora of middle class indicators, notably, the: floating, middle-class with floating, middle-class without floating, lower-middle-income and upper-middle-income categories. Results can be classified into two main strands. First, results on determinants broadly show that GDP per capita and education positively affect all middle class dependent variables. However, we establish a negative nexus for the effect of ethnic fragmentation, political stability in general and partially for economic vulnerability. Simple positive correlations have been observed for: the size of the informal sector, openness and democracy. Second, on the consequences, the middle class enables the accumulation of human and infrastructural capital, while its effect is null on political stability and democracy in the short run but positive for governance and modernisation. Policy implications are discussed. Journal: International Economic Journal Pages: 527-549 Issue: 4 Volume: 30 Year: 2016 Month: 10 X-DOI: 10.1080/10168737.2016.1204340 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1204340 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:4:p:527-549 Template-Type: ReDIF-Article 1.0 Author-Name: John Baffoe-Bonnie Author-X-Name-First: John Author-X-Name-Last: Baffoe-Bonnie Title: Productivity Growth and Input Demand: The Effect of Learning by Doing in a Gold Mining Firm in a Developing Economy Abstract: This paper analyzes the effect of learning by doing (LBD) on the firm’s productivity growth and its input demand decisions. The results indicate that LBD is an important determinant of the firm’s productivity growth. The contribution of LBD to the firm’s productivity growth is about 5.6%. Another observation is that LBD has a decreasing effect on the firm’s cost of production – a finding which is consistent with the results of many studies. Also, an increase in LBD measured by cumulative production increases the firm’s demand for capital, and decreases the firm’s demand for labor. Lastly, LBD has a significant effect on the firm’s elasticity of scale. A fundamental message derived from the study is the confirmation that the firms should invest in more large capital equipment, embark on new processing techniques, and create an environment that is conducive to on-the-job learning. Journal: International Economic Journal Pages: 550-570 Issue: 4 Volume: 30 Year: 2016 Month: 10 X-DOI: 10.1080/10168737.2016.1204341 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1204341 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:4:p:550-570 Template-Type: ReDIF-Article 1.0 Author-Name: Mehdi Abid Author-X-Name-First: Mehdi Author-X-Name-Last: Abid Title: Size and Implication of Informal Economy in African Countries: Evidence from a Structural Model Abstract: This paper presents estimates of the informal economy in 41 African countries, including North Africa, Southern Africa, East Africa, Central Africa and West Africa during the period 2007–2013. Using a structural equation model with latent variables, the empirical results indicate that the average size of the informal economy in Africa (in% of formal gross domestic product) in 41 countries is 42.9%, 39.9% in 5 countries in North Africa, 40.02% in 11 countries in southern Africa, 43.24% in 6 countries of East Africa, 45.5% in 7 countries of Central Africa and 45.21% in 12 countries in West Africa. We suggest economic policy recommendations to solve the dilemma of the informal economy not only in the regions but also in different countries such as: identifying the causes of informality, the barriers to formalization and how to eliminate them; developing policies, procedures and institutions that can help informal activities meet market economy requirements, reforming legal systems and ensuring equal access for all; and finally, establishing affordable social benefits for workers. Journal: International Economic Journal Pages: 571-598 Issue: 4 Volume: 30 Year: 2016 Month: 10 X-DOI: 10.1080/10168737.2016.1204342 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1204342 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:4:p:571-598 Template-Type: ReDIF-Article 1.0 Author-Name: Terence Tai-Leung Chong Author-X-Name-First: Terence Tai-Leung Author-X-Name-Last: Chong Author-Name: Qing He Author-X-Name-First: Qing Author-X-Name-Last: He Author-Name: Wing Hong Chan Author-X-Name-First: Wing Hong Author-X-Name-Last: Chan Title: From Fixed to Float: A Competing Risks Analysis Abstract: This paper examines the determinants of the exchange rate regime of a country. A competing risks model is estimated. It is found that the way a country exits a fixed exchange rate regime is affected non-linearly by the duration of the peg. In addition, countries with a lower growth rate of reserves, higher occurrence of banking crises, higher concentration of trade and lower degree of capital-account liberalisation are more likely to experience a crisis-driven exit. Journal: International Economic Journal Pages: 488-503 Issue: 4 Volume: 30 Year: 2016 Month: 10 X-DOI: 10.1080/10168737.2016.1204343 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1204343 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:4:p:488-503 Template-Type: ReDIF-Article 1.0 Author-Name: Honggue Lee Author-X-Name-First: Honggue Author-X-Name-Last: Lee Title: Do Preferential Rules of Origin Reverse Trade Creation and Trade Diversion? Abstract: Restrictive preferential rules of origin (PROOs) moderate the ‘trade diversion and trade creation’ effects of free trade agreements (FTAs). Moderation effects occur because restrictive PROOs reverse the increase in the relative price of non-member country goods initially caused by FTAs. Such a reversal arises because high compliance costs associated with restrictive PROOs lead to a lower utilization of tariff preferences by member countries. With a lower utilization, the increase in the relative price of non-members country goods would be smaller than it could have been with a full utilization. Thus, restrictive PROOs will lead to less than full trade diversion from non-members to member countries, and less than complete trade creation to member countries. This paper infers the effect of restrictive PROOs on intra-regional trade from the estimated parameters of the revenue function, on the presumption that trade diversion refers to a decrease in the elasticity of substitution between import sources, and that trade creation refers to a difference between the change in import price elasticity and the trade diversion effect. Empirical results support the conjecture that restrictive PROOs move in the opposite direction of FTAs partly undoing the trade diversion and trade creation effects of FTAs. Journal: International Economic Journal Pages: 429-449 Issue: 4 Volume: 30 Year: 2016 Month: 10 X-DOI: 10.1080/10168737.2016.1204344 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1204344 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:4:p:429-449 Template-Type: ReDIF-Article 1.0 Author-Name: Kojun Hamada Author-X-Name-First: Kojun Author-X-Name-Last: Hamada Author-Name: Akihiko Kaneko Author-X-Name-First: Akihiko Author-X-Name-Last: Kaneko Author-Name: Mitsuyoshi Yanagihara Author-X-Name-First: Mitsuyoshi Author-X-Name-Last: Yanagihara Title: The Transfer Problem and Intergenerational Allocation in an Overlapping Generations Model Abstract: We investigate the transfer problem between two countries in the steady state in a one-sector overlapping generations model and explain how transfers should be shared between the young and old generations of the donor country and allocated across the generations of the recipient country. Except at the golden rule of capital accumulation, the ratios of the burden and distribution of transfers between the young and old generations affect welfare. We obtain the following results. First, the sharing of the transfer burden in the donor country depends on the relative size of two effects, namely, a negative direct effect and a positive indirect effect. If the former exceeds the latter, it is preferable for the donor country to allocate all of the transfer burden to the old generation and vice versa. Second, from the viewpoint of welfare maximization, it is preferable for the recipient country to distribute all of the transfers to the young generation. In contrast to the existing literature, these results suggest that the setting whereby the young generation of the donor country defrays all transfer costs may not be justifiable from the viewpoint of donor welfare maximization. Journal: International Economic Journal Pages: 599-615 Issue: 4 Volume: 30 Year: 2016 Month: 10 X-DOI: 10.1080/10168737.2016.1204345 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1204345 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:4:p:599-615 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Editorial Board Journal: International Economic Journal Pages: ebi-ebi Issue: 4 Volume: 30 Year: 2016 Month: 10 X-DOI: 10.1080/10168737.2016.1247514 File-URL: http://hdl.handle.net/10.1080/10168737.2016.1247514 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:30:y:2016:i:4:p:ebi-ebi Template-Type: ReDIF-Article 1.0 Author-Name: Robert Riley Author-X-Name-First: Robert Author-X-Name-Last: Riley Author-Name: Luz Saavedra Author-X-Name-First: Luz Author-X-Name-Last: Saavedra Title: Is International Trade Relevant to Social Trust Formation? Evidence from Cross-country Analysis Abstract: In this paper, we investigate whether international trade itself can contribute to the level of generalized trust. We extend the existing empirical research in several ways. First, we use a larger sample size, we test and reject the treatment of international trade as an exogenous variable, and we address trade endogeneity using instrumental variables estimators. Second, we use geographical variables and international trade prices to instrument for international trade. Third, we perform instrumental variables diagnostics tests to determine the suitability and relevance of our instruments; we also perform tests of the statistical significance of our parameter of interest that are robust to the presence of weak instruments. Our empirical analysis suggests that international trade does have a significant and relatively large positive effect on social trust and reconfirms the role played by other variables like income inequality in the formation of trust found in the literature. Journal: International Economic Journal Pages: 189-211 Issue: 2 Volume: 33 Year: 2019 Month: 4 X-DOI: 10.1080/10168737.2019.1585471 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1585471 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:2:p:189-211 Template-Type: ReDIF-Article 1.0 Author-Name: Mawussé Komlagan Nézan Okey Author-X-Name-First: Mawussé Komlagan Nézan Author-X-Name-Last: Okey Title: Does International Migration Promote Industrial Development? Evidence from Africa 1980–2010 Abstract: This paper examines mainly how international migration affects industrial development in Africa. Using the migration dataset constructed by Brücker, Capuano and Marfouk in 2013, econometric estimations are implemented on a panel of 45 African countries over the period 1980–2010 based on the generalized method of moment estimators. Our results suggest that on average, emigration affects industrial development in Africa positively and significantly during the period of interest. Both low-skilled and medium-skilled emigrants affect more industrial development. The results also reveal that international financial flows, business networks and scientific networks are the channels through which migration affects industrial development. Journal: International Economic Journal Pages: 310-331 Issue: 2 Volume: 33 Year: 2019 Month: 4 X-DOI: 10.1080/10168737.2019.1585902 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1585902 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:2:p:310-331 Template-Type: ReDIF-Article 1.0 Author-Name: Chee-Hong Law Author-X-Name-First: Chee-Hong Author-X-Name-Last: Law Author-Name: Chee-Lip Tee Author-X-Name-First: Chee-Lip Author-X-Name-Last: Tee Author-Name: Wei-Theng Lau Author-X-Name-First: Wei-Theng Author-X-Name-Last: Lau Title: The Impacts of Financial Integration on the Linkages Between Monetary Independence and Foreign Exchange Reserves Abstract: This paper investigates the short-run and long-run effects of financial integration on the dynamics between monetary independence and foreign exchange reserves using a GMM system estimation involving two-year non-overlapping average data (2000-2011) from 114 countries. The results indicate that the effect of foreign exchange reserves on the monetary independence is intensified by the level of financial integration. This suggests a positive spill over effect from the financial integration to the monetary policy independence. Besides, a positive implication of financial integration on monetary independence could be established when the foreign exchange reserves is at the maximum level. In addition, the comparisons between the mean of foreign exchange reserves and the threshold levels of foreign exchange reserves that neutralise the impact of financial integration indicate that on average, the foreign exchange reserves are sufficient to offset the effect of financial integration. A stable exchange rate will undermine the positive impact of foreign exchange reserves on monetary independence. Finally, the long-run and short-run impacts occur in the same direction. This paper ends with some policy implications and suggestions for future research. Journal: International Economic Journal Pages: 212-235 Issue: 2 Volume: 33 Year: 2019 Month: 4 X-DOI: 10.1080/10168737.2019.1587488 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1587488 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:2:p:212-235 Template-Type: ReDIF-Article 1.0 Author-Name: K. M. Guei Author-X-Name-First: K. M. Author-X-Name-Last: Guei Title: External Debt and Growth in Emerging Economies Abstract: The paper studies the relationship between external debt and economic growth in a panel of emerging countries. A number of economists have proposed different methods of analysing the nexus between economic growth and public debt. The paper investigates the debt-growth nexus using a linear and non-linear specification, employing a panel ARDL model on 13 emerging countries during the period 1990–2016. The results show that there is no robust effect of debt on economic growth in the long run; however in the short run, external debt is negatively and significantly correlated to economic growth. Journal: International Economic Journal Pages: 236-251 Issue: 2 Volume: 33 Year: 2019 Month: 4 X-DOI: 10.1080/10168737.2019.1590727 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1590727 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:2:p:236-251 Template-Type: ReDIF-Article 1.0 Author-Name: Coulibaly Kigbajah Salifou Author-X-Name-First: Coulibaly Kigbajah Author-X-Name-Last: Salifou Author-Name: Cao Erbao Author-X-Name-First: Cao Author-X-Name-Last: Erbao Author-Name: Amadou Maiga Ousseini Author-X-Name-First: Amadou Maiga Author-X-Name-Last: Ousseini Author-Name: T. Metuge Mekongcho Author-X-Name-First: T. Author-X-Name-Last: Metuge Mekongcho Title: Cocoa Production Output Response to Smallholder Price Speculation: Case Study of Cote d’Ivoire and Nigeria Abstract: The paper attempts to analyze the variation in cocoa output response to international price fluctuations in two major cocoa producing countries: Cote d’Ivoire and Nigeria. The study employs a Nerlovian price expectation technique as in Ogundari (2015), and a Panel VAR model to empirically estimate changes in cocoa output using time series and an unbalanced panel dataset covering a period from 1967 to 2009. The findings indicate and in accordance with economic theory of demand and supply, that cocoa output is an inverse function of the expected prices of competing agricultural commodities like green coffee. When there is an expected price increase of cocoa, cocoa output rises. Simultaneously, if the anticipated price of coffee rises, through a cocoa–coffee substitution mechanism, smallholder farmers shift their focus to coffee production leading to a fall in cocoa output. A Granger causality test was utilized to investigate causality between cocoa output, and cocoa and coffee prices. In the case of Cote d’Ivoire, while there is only a correlation between cocoa output and price, in the case of Nigeria there was none. In addition, the study shows no unidirectional or bidirectional causality between the intervening variables and cocoa output. Journal: International Economic Journal Pages: 350-364 Issue: 2 Volume: 33 Year: 2019 Month: 4 X-DOI: 10.1080/10168737.2019.1597143 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1597143 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:2:p:350-364 Template-Type: ReDIF-Article 1.0 Author-Name: Anupam Das Author-X-Name-First: Anupam Author-X-Name-Last: Das Author-Name: Adian McFarlane Author-X-Name-First: Adian Author-X-Name-Last: McFarlane Author-Name: Young Cheol Jung Author-X-Name-First: Young Cheol Author-X-Name-Last: Jung Title: Remittances and GDP in Jamaica: An ARDL Bounds Testing Approach to Cointegration Abstract: Similar to other developing nations, Jamaica’s remittances, specifically inflows, are an important source of income support and foreign exchange earnings. Anecdotally, much has been said about the relationship between remittances and GDP in this country. Yet, less has been established using rigorous statistical inference. We test for unit roots with structural breaks and use the autoregressive distributed lag (ARDL) approach to cointegration to help fill this lacuna in the literature on Jamaica. Using annual data for the 1976–2014 period, we examine the relationship between GDP and remittances, both measured in constant 2010 US dollar terms, as we control for the common determinants of economic growth. The main finding is that GDP and remittances are cointegrated relationship wherein they both reinforce each other positively. This finding is statistically robust as the ARDL models have well-behaved errors and parameters that are generally stable over the period. We discuss policy implications of this finding. Journal: International Economic Journal Pages: 365-381 Issue: 2 Volume: 33 Year: 2019 Month: 4 X-DOI: 10.1080/10168737.2019.1597144 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1597144 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:2:p:365-381 Template-Type: ReDIF-Article 1.0 Author-Name: Atif Awad Author-X-Name-First: Atif Author-X-Name-Last: Awad Title: Economic Globalisation and Youth Unemployment – Evidence from African countries Abstract: The present study seeks to examine the impact of economic globalisation on youth unemployment for 50 African countries between the period 1994 and 2013. In addition to the economic globalisation measurements, the present study controlled the variables that represent the fluctuations in economic activates; demographic changes, a country’s economic size; the quality of governmental institutions; and labour market regulation. The results of the Arellano-Bond (A-B) GMM technique showed that greater openness to global markets would reflect in a lower youth unemployment rate. Furthermore, the results revealed that rigidity in labour market regulations seemed to reduce the youth unemployment rate. In addition, urbanisation seemed to raise the youth unemployment rate. The findings supported contemporary calls to participate in international trade to facilitate the job creation process. Journal: International Economic Journal Pages: 252-269 Issue: 2 Volume: 33 Year: 2019 Month: 4 X-DOI: 10.1080/10168737.2019.1604787 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1604787 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:2:p:252-269 Template-Type: ReDIF-Article 1.0 Author-Name: Vincent Konadu Tawiah Author-X-Name-First: Vincent Konadu Author-X-Name-Last: Tawiah Author-Name: Evans John Barnes Author-X-Name-First: Evans John Author-X-Name-Last: Barnes Author-Name: Abdulrasheed Zakari Author-X-Name-First: Abdulrasheed Author-X-Name-Last: Zakari Title: Does Aid Effectiveness Differ per Political Ideologies? Abstract: Despite the extensive empirical literature on aid effectiveness, existing studies have not addressed directly how political ideology affects the use of foreign aid in the recipient country. This study, therefore, uses a unique dataset of 12 democratic countries in Africa to investigate the impact of political ideologies on aid effectiveness. Our results indicate that each political party uses aid differently in peruse of their political, ideological orientation. Further analyses suggest that rightist capitalist parties are likely to use aid to improve the private sector environment. Leftist socialist on the other hand, use aid effectively on pro-poor projects such as short-term poverty reduction, mass education and health services. Our additional analysis on the lines of colonialisation shows that the difference in the use of aid by political parties is much stronger in French colonies than Britain colonies. The study provides insight on how the recipient government are likely to use foreign aid. Journal: International Economic Journal Pages: 270-285 Issue: 2 Volume: 33 Year: 2019 Month: 4 X-DOI: 10.1080/10168737.2019.1609063 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1609063 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:2:p:270-285 Template-Type: ReDIF-Article 1.0 Author-Name: Ferdinand Ahiakpor Author-X-Name-First: Ferdinand Author-X-Name-Last: Ahiakpor Author-Name: William Cantah Author-X-Name-First: William Author-X-Name-Last: Cantah Author-Name: William Brafu-Insaidoo Author-X-Name-First: William Author-X-Name-Last: Brafu-Insaidoo Author-Name: Eric Bondzie Author-X-Name-First: Eric Author-X-Name-Last: Bondzie Title: Trade Openness and Monetary Policy in Ghana Abstract: The study employed a Structural VAR model, using monthly time series data from 2002 to 2017 to assess the relationship between trade openness and effectiveness of monetary policy in Ghana. The empirical results revealed that as the degree of trade openness increases, monetary policy becomes more effective in reducing the rate of inflation. However, monetary policy is less effective to reduce the output gap. Therefore, the results suggest that monetary policy authorities must take into account the level of trade openness whenever they are formulating monetary policy. Journal: International Economic Journal Pages: 332-349 Issue: 2 Volume: 33 Year: 2019 Month: 4 X-DOI: 10.1080/10168737.2019.1610027 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1610027 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:2:p:332-349 Template-Type: ReDIF-Article 1.0 Author-Name: Sherry Yu Author-X-Name-First: Sherry Author-X-Name-Last: Yu Author-Name: Lini Zhang Author-X-Name-First: Lini Author-X-Name-Last: Zhang Title: The Impact of Monetary Policy and Housing-Purchase Restrictions on Housing Prices in China Abstract: This paper examines the level and volatility effect of monetary policy on housing prices in China utilizing a novel set of housing price indices constructed by (Fang, H., QuanlinGu, W. X., & Zhou, L.-A. (2015). Demystifying the Chinese housing boom. NBER Macroeconomics Annual 2015, Volume 30. University of Chicago Press.). We find that in the long-run, average housing prices react positively to inflation, money supply and bank lending growth, and negatively to the reserve requirement ratio and benchmark lending rate. Housing prices in Tier 1 cities respond more sensitively to monetary shocks relative to Tier 2 and 3 cities, possibly due to surging demand and limited supply under housing-purchase restrictions (HPR). We further study the volatility effect of monetary shocks using the GARCH model and find that the benchmark lending rate, reserve requirement ratio and money supply growth have strong negative impact on the volatility of housing price growth. Our benchmark results remain robust after incorporating the HPR policy variable in the estimation, with a significant negative effect of HPR on housing price growth in Tier 1 and Tier 2 cities. Lastly, we conclude with recommendations on future monetary policy design and implementation, with a specific focus on the heterogeneous characteristics of China’s housing market. Journal: International Economic Journal Pages: 286-309 Issue: 2 Volume: 33 Year: 2019 Month: 4 X-DOI: 10.1080/10168737.2019.1610901 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1610901 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:2:p:286-309 Template-Type: ReDIF-Article 1.0 Author-Name: Godwin Okafor Author-X-Name-First: Godwin Author-X-Name-Last: Okafor Title: The Determinants of Firm Performance and Bribery: Evidence from Manufacturing Firms in Nigeria Abstract: This paper uses ordinary least squares with firm effects and Probit regression models to investigate the determinants of firm performance and the likelihood of firms to pay bribes. Results for the manufacturing firms in Nigeria show that skilled workforce, exports, foreign ownership and capital investment influence firm performance. Conversely, poor electricity delivery and difficulty obtaining finance impede firm performance. Total sales and time spent dealing with government regulations increase the likelihood of firms to pay bribes. Surprisingly, foreign firms are as much likely to pay bribes as domestic firms. Policy implications from the findings are important considering that the manufacturing sector assumes an important role in the Lewis theory of economic development. Journal: International Economic Journal Pages: 647-669 Issue: 4 Volume: 31 Year: 2017 Month: 10 X-DOI: 10.1080/10168737.2017.1380678 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1380678 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:4:p:647-669 Template-Type: ReDIF-Article 1.0 Author-Name: Arcade Ndoricimpa Author-X-Name-First: Arcade Author-X-Name-Last: Ndoricimpa Title: Threshold Effects of Inflation on Economic Growth: Is Africa Different? Abstract: This study examines nonlinearities in the inflation-growth nexus in Africa. The study employs a novel dynamic panel threshold regression method developed by Kremer et al. [(2013). Inflation and growth: New evidence from a dynamic panel threshold analysis. Empirical Economics, 44, 861–878. doi:10.1007/s00181-012-0553-9] that extends Hansen’s [(1999). Threshold effects in non-dynamic panels: Estimation, testing, and inference. Journal of Econometrics, 93, 345–368. doi:10.1016/S0304-4076(99)00025-1] non-dynamic panel threshold model as well as Caner and Hansen [(2004). Instrumental variable estimation of a threshold model. Econometric Theory, 20, 813–843. doi:10.1017/S0266466604205011] cross-sectional threshold model to deal with potential endogeneity problems. The findings of this study confirm a non-linear relationship between inflation and economic growth in Africa. More specifically, the results show that the inflation threshold values are 6.7% for the whole sample, 9% for the sub-sample of low-income countries and 6.5% for middle-income countries. The regression results suggest that relatively lower level of inflation appears to be in favor of higher economic growth only in African middle-income countries. However, inflation rate beyond a certain threshold is more likely to be detrimental to economic growth for all the cases. These results are robust by considering additional control variables and using three-year averages of the data. The findings of this study may be useful to African monetary policymakers as they decide on inflation targets to adopt to avoid the detrimental effects of high inflation while reaping the growth benefits of low inflation. Journal: International Economic Journal Pages: 599-620 Issue: 4 Volume: 31 Year: 2017 Month: 10 X-DOI: 10.1080/10168737.2017.1380679 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1380679 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:4:p:599-620 Template-Type: ReDIF-Article 1.0 Author-Name: Anthony Koschmann Author-X-Name-First: Anthony Author-X-Name-Last: Koschmann Author-Name: Douglas Bowman Author-X-Name-First: Douglas Author-X-Name-Last: Bowman Title: Simultaneous Estimation of Legal and Illegal Supply and Demand: The Case of Motion Pictures Abstract: Prior research into illegal goods has typically looked at one-way effects, such as illegal demand on legal demand. This research investigates a previously unexamined component of the market, illegal supply. The authors examine the supply and demand of legal goods and their illegal counterparts as a market system of four interdependent components. This research makes theoretical and empirical contributions by evaluating illegal supply in this system. Simultaneous equations estimate each market component on the others using data from the motion picture industry. The results find illegal supply has no effect on legal supply (movie screens), positive effects on illegal demand (piracy downloads), and some effect on legal demand (box office revenues). Timing effects highlight this: illegal supply has a positive effect on legal demand during a film’s opening week, but no effect post-launch. The other market components have positive effects on illegal supply (except legal supply, which is negative in the opening week). Additionally, illegal demand has a negative effect on legal demand during the opening week of release, but not in the subsequent weeks. This finding alleviates prior research tension as to whether piracy helps or hurts legal sales, as omitting illegal supply could result in biased estimates. Journal: International Economic Journal Pages: 555-577 Issue: 4 Volume: 31 Year: 2017 Month: 10 X-DOI: 10.1080/10168737.2017.1398767 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1398767 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:4:p:555-577 Template-Type: ReDIF-Article 1.0 Author-Name: Rajesh Sharma Author-X-Name-First: Rajesh Author-X-Name-Last: Sharma Author-Name: Samaresh Bardhan Author-X-Name-First: Samaresh Author-X-Name-Last: Bardhan Title: Does Regional Financial Development Matter for Growth? Evidence from Indian States Abstract: The paper investigates finance–growth relationship across 26 Indian states over the period 1981–2012 in a panel setting. We use four indicators of financial development: credit-GSDP ratio, deposit-GSDP ratio, credit-deposit ratio and branch density and apply panel generalized method of moments (GMM) techniques. We observe positive and significant effect of financial development on economic growth and our findings are robust across alternate indicators of financial development and model specifications. Our findings highlight pivotal role played by financial intermediaries in fostering savings mobilization and financing investment activities across states through channels of deposit mobilization, expansion of credit and greater branch expansion in unbanked locations and consequent reduction of transactions costs. These findings are consistent with observations that much of India’s superior growth performance is attributed to high level of domestic savings. The paper also takes care of issues of bias and precision of various GMM estimators arising out of small sample typically prevalent in empirical growth models like ours. Journal: International Economic Journal Pages: 621-646 Issue: 4 Volume: 31 Year: 2017 Month: 10 X-DOI: 10.1080/10168737.2017.1403460 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1403460 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:4:p:621-646 Template-Type: ReDIF-Article 1.0 Author-Name: Giray Gozgor Author-X-Name-First: Giray Author-X-Name-Last: Gozgor Title: The Impact of Globalization on the Structural Unemployment: An Empirical Reappraisal Abstract: This paper analyzes the direct effects of various measures of globalization on the structural unemployment in 87 countries for the period from 1991 to 2014. The model specifications are based on the Ricardian Comparative Advantage and the Heckscher–Ohlin models. It is found that one standard deviation increase in the trade openness approximately leads to 0.6 percentage point lower structural unemployment rate. The effects of economic, social, and political aspects of globalization on the structural unemployment are also negative, but they are found as statistically insignificant. The paper also implements various robustness checks and argues potential implications. Journal: International Economic Journal Pages: 471-489 Issue: 4 Volume: 31 Year: 2017 Month: 10 X-DOI: 10.1080/10168737.2017.1408666 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1408666 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:4:p:471-489 Template-Type: ReDIF-Article 1.0 Author-Name: Mekki Hamdaoui Author-X-Name-First: Mekki Author-X-Name-Last: Hamdaoui Title: RETRACTED ARTICLE: Liberalization, Regulatory Delays and Vulnerability to Systemic Banking Crisis Abstract: Link to the retraction statement: https://doi.org/10.1080/10168737.2019.1637119 Journal: International Economic Journal Pages: 490-534 Issue: 4 Volume: 31 Year: 2017 Month: 10 X-DOI: 10.1080/10168737.2017.1408667 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1408667 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:4:p:490-534 Template-Type: ReDIF-Article 1.0 Author-Name: Fazelina Sahul Hamid Author-X-Name-First: Fazelina Author-X-Name-Last: Sahul Hamid Title: The Effect of Market Structure on Banks’ Profitability and Stability: Evidence from ASEAN-5 Countries Abstract: This paper analyses the effect of market structure on profitability and stability using the sample of 130 commercial banks in ASEAN-5 countries (Indonesia, Malaysia, Philippines, Singapore and Thailand) over the period from 2001 to 2013. More specifically, this study investigates the relevance of the structure conduct performance (SCP) and the relative market power (RMP) hypotheses. This paper also examines the relevance of ‘concentration-stability’ and ‘concentration-fragility’ hypotheses in the case of ASEAN-5 banking. In doing so, we control for the effect of bank-specific and country-specific factors. Empirical results based on system-generalised method of moments (GMM) analyses support the RMP hypothesis but fail to support the SCP hypothesis. We find that concentration stabilizes the banking sector. Evidence also highlights the importance of bank-specific controls related to capitalization and costs on profitability and stability. Implications for policy-makers are addressed. Journal: International Economic Journal Pages: 578-598 Issue: 4 Volume: 31 Year: 2017 Month: 10 X-DOI: 10.1080/10168737.2017.1408668 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1408668 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:4:p:578-598 Template-Type: ReDIF-Article 1.0 Author-Name: Ekpeno L. Effiong Author-X-Name-First: Ekpeno L. Author-X-Name-Last: Effiong Author-Name: Emmanuel E. Asuquo Author-X-Name-First: Emmanuel E. Author-X-Name-Last: Asuquo Title: Migrants' Remittances, Governance and Heterogeneity Abstract: This paper investigates the effect of governance on remittances with specific focus on accounting for heterogeneity in the relationship. Using nonparametric kernel methods that are robust to arbitrary forms of non-linearity, heterogeneity and model specification, and six governance measures from the World Governance Indicators (WGI), the relationship is analysed for 109 countries for the period 1996–2014. The findings show that all six measures: voice and accountability, political stability, government effectiveness, regulatory quality, rule of law and control of corruption are significantly related with remittances. Moreover, the relationship is highly nonlinear and heterogeneous across countries or regions, and time. In addition, specific aspects of governance quality matter differently for remittances across each regional groupings. Hence, there is the need for country-specific rather than a one-size fits all governance reform agenda. Journal: International Economic Journal Pages: 535-554 Issue: 4 Volume: 31 Year: 2017 Month: 10 X-DOI: 10.1080/10168737.2017.1410207 File-URL: http://hdl.handle.net/10.1080/10168737.2017.1410207 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:31:y:2017:i:4:p:535-554 Template-Type: ReDIF-Article 1.0 Author-Name: Salma Haj fraj Author-X-Name-First: Salma Author-X-Name-Last: Haj fraj Author-Name: Mekki Hamdaoui Author-X-Name-First: Mekki Author-X-Name-Last: Hamdaoui Author-Name: Samir Maktouf Author-X-Name-First: Samir Author-X-Name-Last: Maktouf Title: Does Regime Choice Affect Exchange Rate Volatility-Economic Growth Link? An Application of Panel-VAR Approach Abstract: In recent years, numerous studies demonstrated that the effect of exchange rate regimes on economic growth is influenced by several factors. However, the literature rarely takes into account the possible costs associated with improving institutional quality on the choice of exchange systems and the analysis of the effects of shocks in the case of each type of regime. Throughout this research, we analyze the extent of bidirectional shocks according to each regime and compare the shock effects accordingly. The results show that the real exchange rate is less volatile and the shock effect is lower in countries that adopt a fixed exchange rate regime while the exchange rate is more volatile and the shock is higher in countries that adopt a flexible exchange rate regime. To show the effect and persistence of shocks, we carried out a Panel-VAR regression completed by impulse response functions, VAR decomposition and Granger causality tests for 20 countries adopting the first type of exchange regime compared with 20 countries practicing an alternative exchange rate regime in the period from 1996 to 2012. Journal: International Economic Journal Pages: 1-30 Issue: 1 Volume: 32 Year: 2018 Month: 1 X-DOI: 10.1080/10168737.2018.1423627 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1423627 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:1:p:1-30 Template-Type: ReDIF-Article 1.0 Author-Name: Hyunju Kang Author-X-Name-First: Hyunju Author-X-Name-Last: Kang Title: The Time-varying Impact of China’s Economic Rebalancing on Korea’s Exports to China Abstract: While China seeks to shift from exports and investment to a consumption-oriented economy and to increase the self-sufficiency rate of exports, this study uses time-varying parameter vector autoregression (TVP-VAR) to examine the impact of economic structural changes in China on Korea’s exports to China over time. The study results suggest that the impact of China’s export shocks on Korea’s exports has weakened, which demonstrates the slowdown in regional production fragmentation, considering that Korea’s export goods are mainly intermediate goods. Instead, the influence of China’s domestic demand shock on Korea’s exports has expanded, which implies that China has increasingly become the final destination of intermediate goods made in Korea. Journal: International Economic Journal Pages: 31-42 Issue: 1 Volume: 32 Year: 2018 Month: 1 X-DOI: 10.1080/10168737.2018.1423628 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1423628 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:1:p:31-42 Template-Type: ReDIF-Article 1.0 Author-Name: Babagana Mala Musti Author-X-Name-First: Babagana Mala Author-X-Name-Last: Musti Title: Impact of Globalisation on Employment in Nigeria Abstract: This study analyses the effect of globalisation on employment in Nigeria considering the economic, political and social aspects of globalisation using annual time series data for the period 1970 - 2013. The study uses ARDL bounds testing to examine the short-run and long-run effects. The findings indicate that in the short-run, the economic and social aspects of globalisation are beneficial as they induce an increase in employment rate, although both the two aspects of globalisation have only marginal effect in the short-run, while the political integration shows no effect in the short-run. However, in the long-run, all the three aspects of economic, political and social integration show substantial beneficial impact as they all induce a significant increase in the employment rate. Journal: International Economic Journal Pages: 43-52 Issue: 1 Volume: 32 Year: 2018 Month: 1 X-DOI: 10.1080/10168737.2018.1440410 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1440410 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:1:p:43-52 Template-Type: ReDIF-Article 1.0 Author-Name: Mohammad Sharif Karimi Author-X-Name-First: Mohammad Sharif Author-X-Name-Last: Karimi Title: The Linkage Between Tourism Development and Economic Growth in Malaysia: A Nonlinear Approach Abstract: In this study, we examine the nonlinear relationship between international tourism arrival and economic growth of Malaysia by using asymmetric models over the periods 2000:1–2015:4. The results show that the tourism arrival is positively related to Malaysia’s economic growth in the long run, but there is no short-run relationship and other traditional growth factors such as trade, exchange rate and Consumer Price Index are important for economic growth in the case of Malaysia. This implies that tourism can be one of the important factors for Malaysia’s economic growth in the long run and development and can be used to stimulate the overall economic growth and hence, policy-makers should pay greater attention towards promoting inbound tourism. Journal: International Economic Journal Pages: 53-65 Issue: 1 Volume: 32 Year: 2018 Month: 1 X-DOI: 10.1080/10168737.2018.1440411 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1440411 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:1:p:53-65 Template-Type: ReDIF-Article 1.0 Author-Name: Javed Ahmad Bhat Author-X-Name-First: Javed Ahmad Author-X-Name-Last: Bhat Author-Name: Aadil Ahmad ganaie Author-X-Name-First: Aadil Ahmad Author-X-Name-Last: ganaie Author-Name: Naresh Kumar Sharma Author-X-Name-First: Naresh Kumar Author-X-Name-Last: Sharma Title: Macroeconomic Response to Oil and Food Price Shocks: A Structural VAR Approach to the Indian Economy Abstract: The study analyzed the dynamic impact of oil and food price shocks on the macroeconomy of India, using the monthly time series data from April 1994 to May 2016 in a structural vector autoregression (SVAR) framework. Being a net food exporter and net oil importer, the economy is found to face deleterious impacts of global oil and food price shocks on its macroeconomic performance. Output responds negatively to oil and food price hikes along with their volatility and positively to the fall in these prices. Inflation responds positively to all the three transformations of shocks with no signs of coming down, highlighting the price downward inflexibility in India. The study could not establish any evidence of negative demand shocks in face of oil and food price volatility. Central bank responds with a contractionary policy stance to negate the influences of external shocks. Forecast error variance decomposition points out the dominance of external shocks in influencing the domestic variables after their own shocks. Finally, the inflation downward rigidity is observed even in the long run. Journal: International Economic Journal Pages: 66-90 Issue: 1 Volume: 32 Year: 2018 Month: 1 X-DOI: 10.1080/10168737.2018.1446038 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1446038 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:1:p:66-90 Template-Type: ReDIF-Article 1.0 Author-Name: José Méndez Naya Author-X-Name-First: José Author-X-Name-Last: Méndez Naya Title: Mergers, Privatization and Environmental Considerations Abstract: The purpose of this paper is to analyze both merger sustainability and optimal privatization decisions, in an international mixed oligopoly model when it is explicitly assumed that firms’ production pollutes the environment. Contrary to traditional theory it is shown that both a merger between private firms and between one private and one public firm could be sustainable. Furthermore, the effects of environmental considerations on mixed firms’ optimal degree of privatization are analyzed. Journal: International Economic Journal Pages: 91-101 Issue: 1 Volume: 32 Year: 2018 Month: 1 X-DOI: 10.1080/10168737.2018.1446039 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1446039 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:1:p:91-101 Template-Type: ReDIF-Article 1.0 Author-Name: Adhitya Wardhono Author-X-Name-First: Adhitya Author-X-Name-Last: Wardhono Author-Name: Dwi Arisandi Author-X-Name-First: Dwi Author-X-Name-Last: Arisandi Author-Name: M. Abd. Nasir Author-X-Name-First: M. Abd. Author-X-Name-Last: Nasir Title: Empirical Study of Scapegoat Theory Paradigm in the Exchange Rate Variable in the ASEAN 5 Abstract: This paper attempts to explain empirically the effect of order flow as an unobserved variable on the exchange rate movements based on the theory of scapegoat. The theory of scapegoat appears as the answer to the imbalance in the relationship between macroeconomic fundamentals and the exchange rate. To analyze the validity of this theory in Indonesia, the Philippines, Malaysia, Singapore, and Thailand (ASEAN 5), we apply the two-stage least squares method. The empirical testing generates a fact that the paradigm of scapegoat theory works for four countries, namely Indonesia, Malaysia, Singapore, and Thailand. Another finding is that the theory of scapegoat does not work for the Philippines. The implication of policy based on the results is the emphasis of policy that enables intervention in the foreign exchange market, the enhancement of monetary policy transparency in each country, as well as the management of capital flows more efficiently. Journal: International Economic Journal Pages: 102-119 Issue: 1 Volume: 32 Year: 2018 Month: 1 X-DOI: 10.1080/10168737.2018.1446998 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1446998 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:1:p:102-119 Template-Type: ReDIF-Article 1.0 Author-Name: Guido Traficante Author-X-Name-First: Guido Author-X-Name-Last: Traficante Title: Monetary Policy with Parameter Uncertainty in Small-Open Economy Abstract: This paper computes optimal robust monetary policy in a new Keynesian small-open economy model with Knightian uncertainty about the degree of price stickiness and the elasticity of substitution between domestic and foreign goods. Due to the simple model structure used in the paper, I can derive analytical results for the min–max solution under discretion and assess how a robust optimal Taylor rule must be set in small-open economy. I find that, in an optimal robust discretionary equilibrium, the central bank should assume that the degree of price stickiness and the elasticity of substitution between domestic and foreign goods take on their highest numerical values. In terms of interest rate setting, if the optimal discretionary robust equilibrium is implemented with a Taylor rule, the policy rate should react to inflation in a less aggressive way than in the case of complete information. Journal: International Economic Journal Pages: 120-131 Issue: 1 Volume: 32 Year: 2018 Month: 1 X-DOI: 10.1080/10168737.2018.1451551 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1451551 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:32:y:2018:i:1:p:120-131 Template-Type: ReDIF-Article 1.0 Author-Name: Michael Frenkel Author-X-Name-First: Michael Author-X-Name-Last: Frenkel Author-Name: Jan-Christoph Rülke Author-X-Name-First: Jan-Christoph Author-X-Name-Last: Rülke Author-Name: Matthias Mauch Author-X-Name-First: Matthias Author-X-Name-Last: Mauch Title: Forecaster Rationality and Expectation Formation in Foreign Exchange Markets: Do Emerging Countries Differ from Industrialized Economies? Abstract: This paper uses the Consensus Economic Forecast poll to investigate how forecasters in the foreign exchange market form expectations and whether the expectation formation process differs between industrialized and emerging countries. In order to explain the expectation formation of forecasters in countries and country groups, we analyze around 50,000 forecasts for 22 OECD member currencies. We find that differences between the way forecasters in industrialized countries and emerging countries form exchange rate expectations. However, we show that one important difference is due to a difference in forecasting behavior of emerging countries. Controlling for this feature lets the forecasting behavior in emerging countries resemble more the ones found for industrialized countries, but not for all forecast horizons. Journal: International Economic Journal Pages: 383-407 Issue: 3 Volume: 33 Year: 2019 Month: 7 X-DOI: 10.1080/10168737.2019.1632915 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1632915 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:3:p:383-407 Template-Type: ReDIF-Article 1.0 Author-Name: Tarek Chebbi Author-X-Name-First: Tarek Author-X-Name-Last: Chebbi Title: On the Effects of Asset Purchase Programs on Emerging Stock Markets Abstract: It is well documented that there has been a relationship between stock markets and unconventional monetary policies. However, most research concentrates on developed economies and analyzes the effects of shocks from such polices on stock prices. This paper is different from this research in that we investigate the impact of surprises from the Fed’s and the ECB’s announcements on the stock returns and volatility in Gulf Cooperation Council (GCC) countries using GARCH models. We find that a positive surprise associated with a fall in the U.S. Treasury yield causes an increase in ADX returns. We show significant effects of the ECB’s shocks on price returns. In particular, announcement that induces a decline in yield spreads in Italian sovereign bonds leads to higher stock prices. We also document a significant impact of surprises both by the Fed and ECB on volatility. However, the estimates are mixed. We note that volatility went down in response to the ECB’s policies, while they increased after the Fed’s asset purchases. Finally, when we distinguish surprises by their sign, the GJR-GARCH model estimates indicate that the effect on the volatility which is, perhaps surprisingly, symmetric for both types of news. Journal: International Economic Journal Pages: 408-430 Issue: 3 Volume: 33 Year: 2019 Month: 7 X-DOI: 10.1080/10168737.2019.1636844 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1636844 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:3:p:408-430 Template-Type: ReDIF-Article 1.0 Author-Name: Andreas Sachs Author-X-Name-First: Andreas Author-X-Name-Last: Sachs Author-Name: Frauke Schleer Author-X-Name-First: Frauke Author-X-Name-Last: Schleer Title: Labor Market Performance in OECD Countries: The Role of Institutional Interdependencies Abstract: Reducing rigidity in labor markets is key to lowering unemployment. Theoretical models suggest that the impact of such reforms depends on the country-specific regulatory framework. We test this hypothesis by estimating the impact of changes in six categories of regulation conditional on the country-specific regulatory environment for 26 OECD countries. We overcome problems of modeling a large set of institutional interdependencies by applying a machine learning type model selection approach. We provide evidence for the existence of higher-order institutional interdependencies. We further document that especially for changes in employment protection and the unemployment benefit system the impact on unemployment is mixed across countries. Journal: International Economic Journal Pages: 431-454 Issue: 3 Volume: 33 Year: 2019 Month: 7 X-DOI: 10.1080/10168737.2019.1612934 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1612934 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:3:p:431-454 Template-Type: ReDIF-Article 1.0 Author-Name: Mohsen Bahmani-Oskooee Author-X-Name-First: Mohsen Author-X-Name-Last: Bahmani-Oskooee Author-Name: Augustine C. Arize Author-X-Name-First: Augustine C. Author-X-Name-Last: Arize Title: The Sensitivity of U.S. Inpayments and Outpayments to Real Exchange Rate Changes: Asymmetric Evidence From Africa Abstract: A strand of the literature concentrates on assessing the impact of exchange rate changes on a country’s inpayments from and outpayments to its trading partners. Most studies have considered the U.S. experience with partners from OECD but not for those from Africa. We fill this gap by including 14 African partners in our study. We assess not only the symmetric effects of exchange rate changes on the U.S. inpayments from and outpayments to each African partner, but also the asymmetric effects which requires incorporating nonlinear adjustment of the exchange rate. While we found asymmetric effects in the trade with almost all partners in the short run, in a limited number of cases the short-run effects lasted into long-run asymmetric effects. All in all, our findings are partner specific, but they provide more support for using nonlinear models. Journal: International Economic Journal Pages: 455-472 Issue: 3 Volume: 33 Year: 2019 Month: 7 X-DOI: 10.1080/10168737.2019.1632914 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1632914 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:3:p:455-472 Template-Type: ReDIF-Article 1.0 Author-Name: Eric Evans Osei Opoku Author-X-Name-First: Eric Evans Osei Author-X-Name-Last: Opoku Author-Name: Muazu Ibrahim Author-X-Name-First: Muazu Author-X-Name-Last: Ibrahim Author-Name: Yakubu Awudu Sare Author-X-Name-First: Yakubu Awudu Author-X-Name-Last: Sare Title: Foreign Direct Investment, Sectoral Effects and Economic Growth in Africa Abstract: Earlier studies on the impact of Foreign Direct Investment (FDI) on economic growth have not been instructive largely on their failure to examine the sectoral transmission channels through which FDI affects growth. We re-examine the impact of FDI on economic growth in Africa using the system generalized method of moments. The results reveal that, while FDI positively and unconditionally spurs economic growth, its growth-enhancing effect is imaginary when the conditional sectoral effects are introduced. On the channels of manifestation, we notice that the pass-through impact of FDI is only significant for the agricultural and service sectors. Journal: International Economic Journal Pages: 473-492 Issue: 3 Volume: 33 Year: 2019 Month: 7 X-DOI: 10.1080/10168737.2019.1613440 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1613440 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:3:p:473-492 Template-Type: ReDIF-Article 1.0 Author-Name: Yao Seraphin Prao Author-X-Name-First: Yao Seraphin Author-X-Name-Last: Prao Author-Name: Eugene Kamalan Author-X-Name-First: Eugene Author-X-Name-Last: Kamalan Title: Bank Concentration and Interest Rate Margin in WAEMU Zone Abstract: The objective of this paper is to analyse the impact of banking concentration on bank margin. We adapt the specification of [Corvoisier, S., & Gropp, R. (2002). Bank concentration and retail interest rates. Journal of Banking and Finance, 26, 2155–2189] to introduce the number of agencies in capital cities and provinces. We then show that in the short term, only the big four banks have a negative influence on net interest margins in the WAEMU zone. In the long term, the number of agencies in provinces and banking risks are positively linked to bank margin. The policy of opening agencies in provinces as well as credit risk contribute to increasing the cost of long-term credit in the WAEMU zone. Journal: International Economic Journal Pages: 493-508 Issue: 3 Volume: 33 Year: 2019 Month: 7 X-DOI: 10.1080/10168737.2019.1585903 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1585903 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:3:p:493-508 Template-Type: ReDIF-Article 1.0 Author-Name: Sudeshna Ghosh Author-X-Name-First: Sudeshna Author-X-Name-Last: Ghosh Title: Foreign Direct Investment, Female Education, Capital Formation, and Economic Growth in Japan and South Korea Abstract: The influence of foreign direct investment (FDI) on host country‘s economic growth is a widely explored issues in the existing economic literature. This study attempts to examine the role of foreign direct investment, capital formation, and expansion of female education on economic growth of Japan during the period 1971–2014, using time series observations. The study further makes a comparison regarding the association with FDI and economic growth with South Korea, another major OECD economy of Asia The study utilises the auto-regressive distributed lag (ARDL) bounds approach to cointegration to examine the long run causality association among the variables. Today, for sustainable economic development the social and institutional policy issues are important. The paper explores one such social issue, namely gender and economic prosperity. This paper has novel contributions in the current research on time series, econometric analysis for the following reasons: (1) it has investigated the relationship between economic growth, foreign direct investment and capital formation in a gendered differential framework (utilising the role of human capital formation among men versus women; (2) the study covers a long period and more recent time period (till 2014), which concurs with the upsurge of world FDI movements and (3) the study also explores the major structural breaks of the two economies and how economic growth is impacted thereof. Journal: International Economic Journal Pages: 509-536 Issue: 3 Volume: 33 Year: 2019 Month: 7 X-DOI: 10.1080/10168737.2019.1600155 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1600155 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:3:p:509-536 Template-Type: ReDIF-Article 1.0 Author-Name: Yulin Hou Author-X-Name-First: Yulin Author-X-Name-Last: Hou Title: Latin American Growth and Exports to China Abstract: After 2001, the booming trade between China and Latin American and the Caribbean countries (LAC) has led to concerns about a potential ‘resource curse’ and losses in manufacturing due to rising import competition. Little attention was paid to potential gains to LAC from growing Chinese demand for commodities. I address this issue empirically adopting a difference-in-difference framework and find that China's demand did deliver significantly higher growth rates to LAC exporters over the last decade and a half. Journal: International Economic Journal Pages: 537-559 Issue: 3 Volume: 33 Year: 2019 Month: 7 X-DOI: 10.1080/10168737.2019.1626470 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1626470 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:3:p:537-559 Template-Type: ReDIF-Article 1.0 Author-Name: Dong Xuan Nguyen Author-X-Name-First: Dong Xuan Author-X-Name-Last: Nguyen Title: Minimum Wages and Firm Productivity: Evidence from Vietnamese Manufacturing Firms Abstract: This paper empirically examines the minimum-wage impact on firm productivity. Using a detailed Vietnamese firm-level dataset from 2010 through 2015, the regression results suggest that firms raise their labor productivity, total factor productivity, capital intensity and revenue in response to increased minimum wage standards. Firms that pay their workers below the minimum wage react more positively in raising their labor productivity than high-wage firms. Minimum wages has had a more pronounced impact on firms’ labor productivity, total factor productivity and capital intensity since the uniform wage rate was introduced for both domestic private and foreign-invested enterprises in 2012. Journal: International Economic Journal Pages: 560-572 Issue: 3 Volume: 33 Year: 2019 Month: 7 X-DOI: 10.1080/10168737.2019.1624806 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1624806 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:3:p:560-572 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Statement of Retraction Journal: International Economic Journal Pages: 573-573 Issue: 3 Volume: 33 Year: 2019 Month: 7 X-DOI: 10.1080/10168737.2019.1637119 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1637119 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:33:y:2019:i:3:p:573-573 Template-Type: ReDIF-Article 1.0 Author-Name: Mohammadou Nourou Author-X-Name-First: Mohammadou Author-X-Name-Last: Nourou Title: Foreign Aid and Development: The Civil Conflict Channel Reexamined Abstract: Literature on civil conflict effect of foreign aid provides contradictory findings. Some studies find a conflict-reducing effect of aid while for others aid sparks violent conflicts. Another strand of the literature reports the lack of any systematic and robust link between aid and conflict. The aim of this paper is to look beyond this debate on the effect of the volume of aid by investigating whether the volatility of aid could have any independent explanatory power in this empirical literature. Using a logit model of conflict onset on a panel of 130 developing countries from 1974 to 2005, I find that aid per se could have negative, positive or no-effect on conflict outbreak while the volatility of aid positively affects the risk of conflict. This latter result has proven to be robust to some extensions of the econometric model. Therefore, the volatility of aid is an important variable in the determination of aid’s impact on the risk of civil conflict. Consequently, analyses of development effects of aid must consider not only aid per se but also the dynamic behavior of this variable; particularly its volatility. Journal: International Economic Journal Pages: 1-15 Issue: 1 Volume: 34 Year: 2020 Month: 1 X-DOI: 10.1080/10168737.2019.1663438 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1663438 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:1:p:1-15 Template-Type: ReDIF-Article 1.0 Author-Name: Sung-Hoon Park Author-X-Name-First: Sung-Hoon Author-X-Name-Last: Park Author-Name: Jason Shogren Author-X-Name-First: Jason Author-X-Name-Last: Shogren Title: How Selfish Contestants Use Endogenous Emotions to Increase Subjective Utilities Abstract: We study a two-player contest in which each egoistic player can choose to release his emotion information to the rival. Each player selects his emotion-parameter value to maximize his material payoffs and his effort level to maximize his subjective utility. There are different equilibria depending on the difference between the abilities of the players. The favorite reveals his envious emotion and the underdog his altruistic emotion in the equilibrium if the favorite’s ability is moderately higher than that of the underdog. Our results suggest that the classic result of the favorite-as-follower does not occur in the equilibrium of the full game. Journal: International Economic Journal Pages: 16-32 Issue: 1 Volume: 34 Year: 2020 Month: 1 X-DOI: 10.1080/10168737.2019.1681492 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1681492 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:1:p:16-32 Template-Type: ReDIF-Article 1.0 Author-Name: Sèna Kimm Gnangnon Author-X-Name-First: Sèna Kimm Author-X-Name-Last: Gnangnon Title: Impact of Aid for Trade on Trademarks Applications in Recipient-Countries Abstract: The article assesses the effect of Aid for Trade (AfT) inflows on trademarks applications submitted by AfT recipient-countries’ residents. Based on a set of 59 AfT recipient-countries over the period 2002–2014, and using the negative binomial regressions approach, results show that total AfT flows exert a positive and significant effect on trademark applications. However, this positive effect is primarily driven by that of AfT for productive capacity building on trademark applications. The policy implication of these findings is that higher AfT inflows, in particular AfT flows for productive capacity building to recipient-countries would help trading firms submit a high number of trademarks applications, which would in turn contribute to promoting international trade in these countries. Journal: International Economic Journal Pages: 33-47 Issue: 1 Volume: 34 Year: 2020 Month: 1 X-DOI: 10.1080/10168737.2019.1653951 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1653951 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:1:p:33-47 Template-Type: ReDIF-Article 1.0 Author-Name: Wisarut Suwanprasert Author-X-Name-First: Wisarut Author-X-Name-Last: Suwanprasert Title: Trade Restrictiveness Index of Non-Tariff Barriers Under the CES Preference Abstract: The literature has suggested formulas for trade restrictiveness index of tariffs based on second-order approximation. This paper shows that in a special case of the constant-elasticity-of-substitution (CES) preference the trade restrictiveness index of non-tariff barriers can be derived explicitly without using approximation and is simply the weighted $\left (\sigma -1\right ) $(σ−1)th-power average of non-tariff barriers, where σ is the elasticity of substitution and the weights are the observed expenditure shares of imported goods. Numerical simulations show that the proposed index accurately measures the aggregate of non-tariff barriers while other indices have persistent measurement errors. Journal: International Economic Journal Pages: 48-57 Issue: 1 Volume: 34 Year: 2020 Month: 1 X-DOI: 10.1080/10168737.2019.1671475 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1671475 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:1:p:48-57 Template-Type: ReDIF-Article 1.0 Author-Name: Charles Shaaba Saba Author-X-Name-First: Charles Shaaba Author-X-Name-Last: Saba Author-Name: Nicholas Ngepah Author-X-Name-First: Nicholas Author-X-Name-Last: Ngepah Title: Empirical Analysis of Military Expenditure and Industrialisation Nexus: A Regional Approach for Africa Abstract: This study investigates the impact of military expenditure on industrialisation at regional economic communities of African countries for a balanced panel of 35 African countries between 1990 and 2015. We applied a more recently developed panel causality and Generalised Method of Moments (GMM) estimation techniques. The findings suggest a feedback causality between military expenditure and industrialisation, but with significant differences between military expenditure and other determining variables of industrialisation. The causality results justified the use of System-GMM. The System-GMM results show that military expenditure has: (1) significant positive impact on industrialisation in AMU, CEN-SAD, IGAD, and SADC; (2) insignificant impact in COMESA, ECCAS and ECOWAS regions. The positive impact of military expenditure on industrialisation in the four regions suggests that the military expenditure needed to create a conducive environment for industrialisation process has been relatively effective. While in regions where the impact is insignificant suggests the need for a greater coordinated military spending needed to promote industrialisation process. Journal: International Economic Journal Pages: 58-84 Issue: 1 Volume: 34 Year: 2020 Month: 1 X-DOI: 10.1080/10168737.2019.1641541 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1641541 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:1:p:58-84 Template-Type: ReDIF-Article 1.0 Author-Name: Perekunah B. Eregha Author-X-Name-First: Perekunah B. Author-X-Name-Last: Eregha Title: Exchange Rate Regimes and Foreign Direct Investment Flow in West African Monetary Zone (WAMZ) Abstract: This study examines the effect of exchange rate regimes on foreign direct investment (FDI) flow for West African Monetary Zone (WAMZ). The Arellano Panel Correction for Serial Correlation and Heteroskedaticity option of the Within Estimator for fixed-effect panel data model as well as the Dynamic Panel Data Instrumental Variable Approach by Anderson and Hsiao [(1981). Estimation of dynamic models with error components. Journal of the American Statistical Association, 76, 598–606] for the countries selected based on the data availability for the period 1980–2016 were used. The fixed exchange rate regime was found to hamper FDI flow in the zone, while intermediate policy had a significantly positive effect in facilitating FDI flow during periods of declining foreign reserves and narrowing current account balance in WAMZ. This implies that the transmission of the effect of exchange rate regimes on FDI inflows depends on the positions of the foreign reserves and current account balance in the zone. The study therefore recommends the need for monetary authorities to be cautious in managing their exchange rates especially in periods of depleting foreign reserves and narrowing current account so as not to deter the much needed FDI inflow. Journal: International Economic Journal Pages: 85-99 Issue: 1 Volume: 34 Year: 2020 Month: 1 X-DOI: 10.1080/10168737.2019.1669689 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1669689 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:1:p:85-99 Template-Type: ReDIF-Article 1.0 Author-Name: Samson Adeniyi Aladejare Author-X-Name-First: Samson Adeniyi Author-X-Name-Last: Aladejare Title: Macroeconomic Vs. Resource Determinants of Economic Growth in Africa: A COMESA and ECOWAS Study Abstract: This study simultaneously investigates the macroeconomic and the resource determinants of economic growth in the ECOWAS and the COMESA regions. The objective of this study was to empirically ascertain which of the two determinant is key for growth in both regions. To achieve this, the pool mean group technique of analysis was adopted. Empirical findings from the study analysis suggest that long-run economic growth determination in the ECOWAS region, is more reliant on macroeconomic variables and not resource price. While in the COMESA, the impact of macroeconomic determinants on long-run growth is less. In addition, reliance on resource price for long-run growth in the COMESA is found to be growth decelerating. In the short-run, growth determination in the ECOWAS is highly responsive to resource price negatively, while macroeconomic determinants of growth are weak. However, findings for the COMESA region suggest that short-run growth is highly responsive to macroeconomic determinants negatively, and to resource price positively. Hence, for countries in both regions to achieve sustainable long-term growth, there is the need for improvement in their macroeconomic management. Journal: International Economic Journal Pages: 100-124 Issue: 1 Volume: 34 Year: 2020 Month: 1 X-DOI: 10.1080/10168737.2019.1663439 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1663439 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:1:p:100-124 Template-Type: ReDIF-Article 1.0 Author-Name: Stephen Esaku Author-X-Name-First: Stephen Author-X-Name-Last: Esaku Author-Name: Waldo Krugell Author-X-Name-First: Waldo Author-X-Name-Last: Krugell Title: Firm-Level Investment and Exporting: New Empirical Evidence from Ghana and Tanzania Abstract: Using firm-level data from two selected African countries, we examine whether firm-level investment in physical capital is a possible channel through which less productive firms gain entry into export markets. Our findings reveal that non-exporters who invest in physical capital increase their probability of switching status, from non-exporter to exporter, and we provide evidence that firm-level investment is correlated with increased productivity growth among exporters. Consequently, we emphasize that firm-level investment in physical capital enables non-exporters to increase their odds of entry to export markets and provides opportunity for young exporters to grow rapidly and persist long in export markets. Although firm productivity differences can be explained by self-selection factors as one channel, firm-level investment in physical capital provides another explanation as to why less productive firms gain entry into the export markets. We establish that when firms invest in physical capital, they improve their productive capacity thereby raising their productivity in the process. Export promotion policies should target providing support to firms that seek to upgrade or expand their production technology as this would stimulate the probability of export market entry hence promoting exports. Journal: International Economic Journal Pages: 125-143 Issue: 1 Volume: 34 Year: 2020 Month: 1 X-DOI: 10.1080/10168737.2019.1663440 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1663440 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:1:p:125-143 Template-Type: ReDIF-Article 1.0 Author-Name: Muhammad Waqas Khalid Author-X-Name-First: Muhammad Waqas Author-X-Name-Last: Khalid Author-Name: Nahla Samargandi Author-X-Name-First: Nahla Author-X-Name-Last: Samargandi Author-Name: Aadil Hameed Shah Author-X-Name-First: Aadil Hameed Author-X-Name-Last: Shah Author-Name: Seita Almandeel Author-X-Name-First: Seita Author-X-Name-Last: Almandeel Title: Socio-Economic Factors and Women’s Empowerment: Evidence from Punjab, Pakistan Abstract: The empowerment of women is an essential objective to fully engage them in economic life and achieve sustainable growth throughout the world. Providing basic facilities to women is one form of empowerment. This paper examines the extent of women’s empowerment in Punjab, Pakistan and its divisions, along with rural and urban regions. In addition, we check the effect of the gender wage differential on the current dilemma by implementing Alkire et al.’s [2013.The women’s empowerment in agriculture index (Working Paper No. 58). Oxford, UK: Oxford Poverty and Human Development Initiative. Retrieved from https://www.ophi.org.uk/wp-content/uploads/ophi-wp-58.pdf.] indexing on HIES 2013–14 datasets. Our results show that 34.91% of women are empowered in Punjab overall, with independence being the highest dimensional contributor, and ownership of assets being the least. Women are 31.43% more empowered in urban regions. The results indicate that Islamabad has significantly more women’s empowerment, while Dera Ghazi Khan has the lowest percentage of empowered women. To assess particular impacts of different socio-economic and demographic variables on women’s empowerment, logistic regression model is applied, revealing that most socio-economic and demographic variables have significant impacts on the current scenario, and variation in any variable causes significant variations in the status of women’s empowerment, with increased wage differential in particular, decreasing the probability of women being empowered. Journal: International Economic Journal Pages: 144-168 Issue: 1 Volume: 34 Year: 2020 Month: 1 X-DOI: 10.1080/10168737.2019.1677742 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1677742 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:1:p:144-168 Template-Type: ReDIF-Article 1.0 Author-Name: Imen Kobbi Author-X-Name-First: Imen Author-X-Name-Last: Kobbi Author-Name: Foued badr Gabsi Author-X-Name-First: Foued badr Author-X-Name-Last: Gabsi Title: Nonlinearities in Central Bank of Tunisia’s Reaction Function: Pre-and Post Revolution Analysis Abstract: This paper seeks to check the existence of possible nonlinearity in the behavior of the Central Bank of Tunisia (CBT) in response to changes in macroeconomic variables over 2000:1-2018:12 period (pre-and post-2011 revolution). We used a general model with asymmetric loss function, which enables Central Bankers to weight differently positive and negative deviations of inflation and output from their reference values, as well as a nonlinear economic structure. The empirical analysis reveals that in the pre-revolutionary period, the CBT, for the sake of financial stability approved asymmetric preferences only toward the inflation rate in the sense that it reduces interest rate by a larger amount when inflation is expected to be below the target than the amount it will increase it when it is expected to be above target. During the post-revolutionary period, which was marked by a severe economic recession, the CBT also showed asymmetric preferences toward the output stabilization as it reacted more vigorously to recession. Nevertheless, for a sufficiently large inflation pressure strengthened by the nonlinear economic structure, the CBT is obliged to enhance sharply the political instrument and to carry out a strict restrictive monetary policy. Journal: International Economic Journal Pages: 169-183 Issue: 1 Volume: 34 Year: 2020 Month: 1 X-DOI: 10.1080/10168737.2019.1704821 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1704821 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:1:p:169-183 Template-Type: ReDIF-Article 1.0 Author-Name: Parul Deswal Author-X-Name-First: Parul Author-X-Name-Last: Deswal Title: Predicting the Effects of Services Trade Liberalization Abstract: This paper uses a computable model of trade to estimate the effects of a free trade agreement on the services and the manufacturing sector. It is parameterized using 2005 data for 6 services industries and total manufacturing sector in 32 countries. The results show that a 10% reduction in both services and total manufacturing trade costs in all the countries will increase welfare by an average 10.20% across all countries. The average welfare gains across all countries are higher in case of reduction in only services trade costs compared to a 10% reduction in only manufacturing trade costs. Interestingly, however there are some countries in which trade liberalization in manufacturing brings more welfare than trade liberalization in services, while in other countries it is vice versa. The simulation results also show that implementing a trade agreement between the U.S. and the U.K. which reduces trade costs in both services and manufacturing by 10% would increase welfare in both the countries: 1.18% in the U.K. and 0.98% in the U.S. In the U.S. specialization increases in travel services, other services and manufacturing. In the U.K. specialization increases in financial services, construction services and manufacturing. Journal: International Economic Journal Pages: 185-201 Issue: 2 Volume: 34 Year: 2020 Month: 4 X-DOI: 10.1080/10168737.2019.1704822 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1704822 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:2:p:185-201 Template-Type: ReDIF-Article 1.0 Author-Name: Mariko Nakagawa Author-X-Name-First: Mariko Author-X-Name-Last: Nakagawa Title: Skill Transferability and Migration: A Theoretical Analysis of Skilled Migration Under Frictional Skill Transfer Abstract: In this study, we analyze how skill transferability from an origin country to a destination country characterized by lower productivity, affects skilled worker migration, by using a multi-country new economic geography model proposed by Gasper et al. (2018). Specifically, we explain how countries that are less frictional in terms of skill transfer attract more high-skilled international migrants. The analysis, which is based on asymmetric skill transferability among countries that can be divided into two groups – those with smooth skill transferability for migrants and those with less smooth skill transferability – finds that countries with smooth skill transferability are more likely to be the industrial core attracting all skilled workers. We also find that lower frictional migration costs from a country with less smooth skill transferability to a country with smooth skill transferability always accelerates industrial agglomeration in the smooth skill transferability core country, while lower frictional migration costs between smooth skill transferability countries does not necessarily accelerate industrial agglomeration in a country with smooth skill transferability due to market crowding effects. Journal: International Economic Journal Pages: 202-237 Issue: 2 Volume: 34 Year: 2020 Month: 4 X-DOI: 10.1080/10168737.2020.1747100 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1747100 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:2:p:202-237 Template-Type: ReDIF-Article 1.0 Author-Name: Minjung Park Author-X-Name-First: Minjung Author-X-Name-Last: Park Title: Advertising and Market Structure in the US Mutual Fund Industry Abstract: This paper empirically investigates the role played by advertising in determining market structures in various segments of the US mutual fund industry. Segments with intermediaries or sophisticated customers exhibit low advertising elasticity of demand, low advertising expenditures, and low market concentration. They also experience further market fragmentation over time. On the contrary, segments which cater to less sophisticated customers without intermediaries exhibit advertising-sensitive demand as well as high advertising expenditures. Those segments exhibit high market concentration and their market structure becomes further concentrated over time. These findings shed light on the impact of consumer characteristics on firms' optimal advertising and resultant market structure. Journal: International Economic Journal Pages: 238-257 Issue: 2 Volume: 34 Year: 2020 Month: 4 X-DOI: 10.1080/10168737.2019.1689285 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1689285 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:2:p:238-257 Template-Type: ReDIF-Article 1.0 Author-Name: Panagiotis Pegkas Author-X-Name-First: Panagiotis Author-X-Name-Last: Pegkas Author-Name: Christos Staikouras Author-X-Name-First: Christos Author-X-Name-Last: Staikouras Author-Name: Constantinos Tsamadias Author-X-Name-First: Constantinos Author-X-Name-Last: Tsamadias Title: Does Domestic and Foreign R&D Capital Affect Total Factor Productivity? Evidence from Eurozone Countries Abstract: The purpose of this study is to empirically investigate the impact of domestic and foreign R&D capital on TFP in the Eurozone countries over the period 1995–2016. The variations in the TFP level for each country are explained by the changes in both the domestic and foreign R&D capital. Total domestic R&D capital is divided into three sectors, namely business, public and higher education. This specification allows to explore the role of certain variables in the long-run evolution of TFP in Eurozone countries. The results indicate that all variables of R&D capital have a positive contribution to TFP. Foreign R&D capital appears to have higher contribution to the TFP level than domestic R&D capital in all estimations and specifications. The impact of higher education R&D capital is larger than that of the business and public. The estimations are related to the productivity slowdown, especially over the period of economic crisis, and the high degree of differences in income per capita and productivity levels among the Eurozone member states. The results point to the need for policy actions to increase the available domestic R&D capital in all countries and improve the technology diffusion among them within the Eurozone. Journal: International Economic Journal Pages: 258-278 Issue: 2 Volume: 34 Year: 2020 Month: 4 X-DOI: 10.1080/10168737.2020.1734645 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1734645 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:2:p:258-278 Template-Type: ReDIF-Article 1.0 Author-Name: Izunna Anyikwa Author-X-Name-First: Izunna Author-X-Name-Last: Anyikwa Author-Name: Pierre Le Roux Author-X-Name-First: Pierre Author-X-Name-Last: Le Roux Title: Integration of African Stock Markets with the Developed Stock Markets: An Analysis of Co-Movements, Volatility and Contagion Abstract: This paper investigates evidence of integration and contagion between major African stock markets (ASMs) and developed stock markets during the periods of global financial crisis (GFC) and Eurozone sovereign debt crisis (ESDC). Specifically, it examined whether the co-movement between ASMs and developed stock markets during the two crisis periods is related to their level of financial integration or due to contagion. The study finds limited evidence of integration between ASMs and developed markets. However, the analysis of dynamic correlations shows that the conditional correlations are typically positive and higher during the periods of crisis, indicating substantial evidence of contagion. These findings suggest that the observed co-movements between stock markets during the crises were mainly due to contagion. The findings of this paper have several implications with respect to financial market stability, portfolio diversification and policy interventions. Journal: International Economic Journal Pages: 279-296 Issue: 2 Volume: 34 Year: 2020 Month: 4 X-DOI: 10.1080/10168737.2020.1755715 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1755715 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:2:p:279-296 Template-Type: ReDIF-Article 1.0 Author-Name: Kazeem B. Ajide Author-X-Name-First: Kazeem B. Author-X-Name-Last: Ajide Author-Name: Ibrahim D. Raheem Author-X-Name-First: Ibrahim D. Author-X-Name-Last: Raheem Title: Does Democracy Really Fuel Terrorism in Africa? Abstract: This article complements the extant literature on terrorism by paying particular attention to the influence of democracy on a panel of 49 African countries, over the period 1980–2012. For this broad objective to be achieved, terrorism is decomposed into four main categories, namely domestic, transnational, uncertain and total. Due to the count nature of terrorism data, the study employs a negative binomial regression estimator, in which the following key findings are established: (i) there is a mitigating role of democracy on measures of terrorism, with the exemption of transnational terrorism; (ii) there is existence of threshold values of democracy which must be attained in order to ascertain its mitigating role on terrorism; (iii) the importance of other covariates such as conflicts, population, surface areas and physical integrity rights are no less significant across the model specifications. These results have important policy implications. We also offer suggestions for future research. Journal: International Economic Journal Pages: 297-316 Issue: 2 Volume: 34 Year: 2020 Month: 4 X-DOI: 10.1080/10168737.2020.1741014 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1741014 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:2:p:297-316 Template-Type: ReDIF-Article 1.0 Author-Name: Paul Owusu Takyi Author-X-Name-First: Paul Owusu Author-X-Name-Last: Takyi Author-Name: Roberto Leon-Gonzalez Author-X-Name-First: Roberto Author-X-Name-Last: Leon-Gonzalez Title: Monetary Policy and Financial Exclusion in an Estimated DSGE Model of Sub-Saharan African Economies Abstract: This paper examines the effectiveness of monetary policy and its implications for financially included and excluded households in Sub-Saharan African (SSA) economies, using an estimated New-Keynesian dynamic stochastic general equilibrium (DSGE) model. The model has financially included households coexisting with financially excluded households. We exploit time series data on four SSA economies, spanning 1985–2016, to estimate the model’s parameters through Bayesian inference methods. Our estimation results show that the share of financially excluded households in these economies is relatively small, usually between 35% and 42%. Further, our Bayesian impulse response analysis shows that a positive monetary policy shock significantly reduced inflation and output, despite a sizeable fraction of the population is financially excluded. Additionally, we find that contractionary monetary policy tends to have differentiated impacts; it decreases the consumption of financially excluded households more than that of financially included ones. The results reveal that financially included households are able to absorb shocks, and thus can smooth consumption more effectively than financially excluded households. Generally, although an increase in the number of financially excluded households reduces the effects of interest rate policies, we find an opposite result: the effectiveness of monetary policy improves as the fraction of financially included households falls. Journal: International Economic Journal Pages: 317-346 Issue: 2 Volume: 34 Year: 2020 Month: 4 X-DOI: 10.1080/10168737.2020.1729835 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1729835 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:2:p:317-346 Template-Type: ReDIF-Article 1.0 Author-Name: Ulker Begum Ishchy Author-X-Name-First: Ulker Begum Author-X-Name-Last: Ishchy Title: The Role of Education on Economic Growth: Evidence from Turkey Abstract: This paper examines the short- and long-term impacts of education on Turkey’s economic growth between 1990 and 2018 through two dimensions: Human capital (labour productivity) and innovative capacity. The study draws attention to the quantitative aspects of education showing how employees with different stages (primary, secondary, and tertiary) of education contribute to labour productivity and technological developments in the country. Besides, it also attaches great significance to the qualitative aspects of education which have been largely ignored in the literature. Using the autoregressive distributed lag co-integration technique, the study finds statistically significant short- and long-run impacts running from fractions of employees with maximum secondary and tertiary education qualifications to output growth. It reveals that tertiary education has three-fold long-run impact on economic growth compared to secondary education. The study documents significant long-run impacts of PISA, students per classroom, and students per teacher on economic growth; however, they fail to generate statistically significant impacts on economic growth in the short-run. Thus, the study concludes that intangible values of education can take a longer time to generate tangible outcomes on the economy and the model converges to its long-run equilibrium at a speed of 12%. Journal: International Economic Journal Pages: 347-369 Issue: 2 Volume: 34 Year: 2020 Month: 4 X-DOI: 10.1080/10168737.2019.1689284 File-URL: http://hdl.handle.net/10.1080/10168737.2019.1689284 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:2:p:347-369 Template-Type: ReDIF-Article 1.0 Author-Name: Kazuhiro Ohnishi Author-X-Name-First: Kazuhiro Author-X-Name-Last: Ohnishi Title: Capacity Choice in an International Mixed Triopoly Abstract: This paper considers a mixed triopoly model where a state-owned firm, a domestic labor-managed firm and a foreign capitalist firm are allowed to pre-install capacity as a strategic commitment device. First, each firm can choose its capacity level simultaneously and independently. None of the firms can reduce or dispose of capacity. Second, each firm chooses its output level simultaneously and independently. The paper presents the equilibrium outcomes of the international triopoly model. We find that the equilibrium outcomes are not profitable for the foreign capitalist firm. Journal: International Economic Journal Pages: 371-387 Issue: 3 Volume: 34 Year: 2020 Month: 7 X-DOI: 10.1080/10168737.2020.1797852 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1797852 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:3:p:371-387 Template-Type: ReDIF-Article 1.0 Author-Name: Donghyun Lee Author-X-Name-First: Donghyun Author-X-Name-Last: Lee Title: Resource-Seeking Cross-Border Mergers and Acquisitions and Growth: Industry-level Analysis Abstract: While the effect of foreign direct investment (FDI) on economic growth at the aggregate level is ambiguous, recent studies at the sector level suggest that this could be due to aggregation. And yet, studies on the effect of FDI on growth at the sector level are scant in the literature. In this paper, I empirically examine the effect of FDI on growth using detailed data on worldwide mergers and acquisitions (M&A) activity at industry level from 1986 to 2010. My results show that foreign acquisition has positive effect on the host country’s economic growth overall. However, the effect varies by sector and foreign acquisition into extractive industries has least positive effect on growth. This also seems to be more pronounced in natural resource-abundant developing countries. On the other hand, foreign acquisition into manufacturing sector has biggest positive effect on growth. Journal: International Economic Journal Pages: 388-404 Issue: 3 Volume: 34 Year: 2020 Month: 7 X-DOI: 10.1080/10168737.2020.1780293 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1780293 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:3:p:388-404 Template-Type: ReDIF-Article 1.0 Author-Name: Sèna Kimm Gnangnon Author-X-Name-First: Sèna Kimm Author-X-Name-Last: Gnangnon Title: General Budget Support and Tax Revenue Instability in Developing Countries Abstract: The main thrust of this article is to investigate the effect of general budget support (GBS) resources on tax revenue instability in recipient-countries, including when the latter experience higher economic growth volatility and higher terms of trade instability. The empirical findings suggest that GBS flows exert a negative effect on tax revenue instability, with the magnitude (in absolute value) of this negative effect being lower in Sub-Saharan African (SSA) countries compared to NonSSA countries in the sample. Additionally, the magnitude of the negative effect of GBS resources on tax revenue instability increases as countries experience higher economic growth volatility or greater terms of trade instability. It is worth noting that the magnitude of the GBS effect on tax revenue instability is small, including compared to other development aid inflows. Thus, from an economic perspective, GBS flows exert a lower effect on tax revenue instability than do other development aid flows. Journal: International Economic Journal Pages: 405-425 Issue: 3 Volume: 34 Year: 2020 Month: 7 X-DOI: 10.1080/10168737.2020.1780291 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1780291 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:3:p:405-425 Template-Type: ReDIF-Article 1.0 Author-Name: Arpita Asha Khanna Author-X-Name-First: Arpita Asha Author-X-Name-Last: Khanna Title: Does Oil Ownership Affect Institutions? Abstract: A large body of literature shows that oil wealth leads to poor quality of institutions. The existing literature, however, neglects the dimension of ownership. This article provides the first empirical investigation of whether ownership of oil matters for institutional quality. Using a novel database on ownership structures, it analyzes a sample of 38 oil-rich developing countries during 1984–2005. The estimation results show that ownership matters and that private ownership of oil leads to a better quality of institutions than state ownership. The results are useful for oil-rich countries in adopting appropriate policies to maximize the benefits of oil to the nation. Journal: International Economic Journal Pages: 426-447 Issue: 3 Volume: 34 Year: 2020 Month: 7 X-DOI: 10.1080/10168737.2020.1750046 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1750046 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:3:p:426-447 Template-Type: ReDIF-Article 1.0 Author-Name: Saidi Samir Author-X-Name-First: Saidi Author-X-Name-Last: Samir Author-Name: Haifa Mefteh Author-X-Name-First: Haifa Author-X-Name-Last: Mefteh Title: Empirical Analysis of the Dynamic Relationships between Transport, ICT and FDI in 63 Countries Abstract: This study examines the relationship between information and communication technologies (ICT), transport, and foreign direct investment (FDI) in countries with different income levels over the period 2000-2016. We investigate the impact of ICT and transport on territorial attractiveness of FDI in host countries. A global panel of 63 countries has been divided into three sub-panels. Using the GMM estimators, we found that these variables influence each other in the long-run. The causality direction varies across panels with different levels of significance. These empirical investigations are of particular interest to policymakers in both developed and developing countries. They prove the major impact of transport and ICT infrastructures on economic development of host countries through their significant contribution to improve FDI attractiveness. Moreover, the results confirm the positive role of transport and ICTs in supporting economic growth by strengthening countries’ economic openness and increasing their participation in international trade. Journal: International Economic Journal Pages: 448-471 Issue: 3 Volume: 34 Year: 2020 Month: 7 X-DOI: 10.1080/10168737.2020.1765186 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1765186 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:3:p:448-471 Template-Type: ReDIF-Article 1.0 Author-Name: Shijun Cao Author-X-Name-First: Shijun Author-X-Name-Last: Cao Author-Name: Sung Jin Kang Author-X-Name-First: Sung Jin Author-X-Name-Last: Kang Title: Personal Remittances and Financial Development for Economic Growth in Economic Transition Countries Abstract: This study investigates the effect of personal remittance inflows and financial development on the economic growth of 29 economic transition countries for the period of 2000–2015. Dynamic panel system GMM estimation results show that there is a positive relationship between remittance inflows and economic growth. It also shows that remittances and the level of financial development have a substitute relationship in promoting economic growth. So the remittance inflows have a positive effect on economic growth for the countries with low levels of financial development, but they have a negative effect on such growth for countries with moderate to high levels of financial development. Journal: International Economic Journal Pages: 472-492 Issue: 3 Volume: 34 Year: 2020 Month: 7 X-DOI: 10.1080/10168737.2020.1765187 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1765187 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:3:p:472-492 Template-Type: ReDIF-Article 1.0 Author-Name: Gor A. Khachatryan Author-X-Name-First: Gor A. Author-X-Name-Last: Khachatryan Author-Name: Aleksandr Grigoryan Author-X-Name-First: Aleksandr Author-X-Name-Last: Grigoryan Title: Export Growth Dynamics and Real Exchange Rate: Evidence from Armenia Abstract: In the light of recently revealed evidence that suggests a weaker impact of exchange rates on trade, this paper empirically studies the link between real exchange rate and exports in the context of a developing country, Armenia, using quarterly data from January 2001 to June 2019. In the course of this analysis, by performing a rolling regression, we confirm the evidence of a subdued impact of exchange rates on exports. We also investigate the effects of exchange rate volatility on exports for Armenia, where exchange rate risk is not generally hedged by exporting firms. Though dozens of studies have examined the effect of exchange rate fluctuations on international trade, the influence of exchange rate volatility is still ambiguous from empirical point of view. Our estimations indicate that short-term exchange rate volatility has no impact on exports. Finally, we study the dynamics of the prolonged overvaluation of exchange rates observed in the economy of Armenia since the early 2000s, which caused a continual deterioration in its external competitiveness. Using the instrumental variable–generalized method of moments (IV-GMM) framework, we estimate a two-stage model for the real effective exchange rate (REER) with endogenous remittances and find evidence of the Dutch disease in Armenia. Journal: International Economic Journal Pages: 493-509 Issue: 3 Volume: 34 Year: 2020 Month: 7 X-DOI: 10.1080/10168737.2020.1750045 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1750045 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:3:p:493-509 Template-Type: ReDIF-Article 1.0 Author-Name: Qizhong Yang Author-X-Name-First: Qizhong Author-X-Name-Last: Yang Author-Name: Tsunehiro Otsuki Author-X-Name-First: Tsunehiro Author-X-Name-Last: Otsuki Author-Name: Etsuyo Michida Author-X-Name-First: Etsuyo Author-X-Name-Last: Michida Title: Product-Related Environmental Regulation, Innovation, and Competitiveness: Empirical Evidence From Malaysian and Vietnamese Firms Abstract: In the past decade, product-related environmental regulations (PRERs) aimed at environmental protection and consumers’ health and safety were actively introduced in developed countries, led by the EU. This study examined the impact of two PRERs released by the EU—RoHS and REACH—on Malaysian and Vietnamese firms’ compliance. The first analysis focuses on the R&D enhancement effect of PRERs. We then consider productivity as a realization of innovations and examine if the R&D enhanced by PRERs can promote further productivity. The result shows that the response to REACH can create incentives to advance R&D. Further estimations on the effect of induced R&D on firm productivity show a significant positive relationship between them. On the other hand, no relationship between the response to RoHS and R&D expenditure is found. Moreover, the analysis also shows that firms comply with RoHS and REACH in different ways, but just the ability to continue exporting to the EU motivates compliance. Journal: International Economic Journal Pages: 510-533 Issue: 3 Volume: 34 Year: 2020 Month: 7 X-DOI: 10.1080/10168737.2020.1771398 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1771398 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:3:p:510-533 Template-Type: ReDIF-Article 1.0 Author-Name: Sikiru Babalola Author-X-Name-First: Sikiru Author-X-Name-Last: Babalola Author-Name: Waliu Shittu Author-X-Name-First: Waliu Author-X-Name-Last: Shittu Title: Foreign Aid and Economic Growth in West Africa: Examining the Roles of Institutions Abstract: This study examines the roles of institutions on the relationship between foreign aid and economic growth in the 16 West African countries. Relying on panel data obtained from the World Bank’s world development and governance indicators, from 1996 to 2017, the study employs the autoregressive distributed lag technique in investigating the relationship. The empirical findings depict that foreign aid exerts a neutral effect on economic growth; the effect turns negative when the institutional variable is incorporated into the analysis. Again, the interaction effect of foreign aid and institution on economic growth is such that it reduces the negative effect of foreign aid on economic growth. The other factors of growth included are trade openness and government size, whose effects are positive and largely negative on the growth of the West African region, respectively. A significant policy implication from these findings is that the efforts of governments of the region should be directed towards building formidable economic, social and political institutions. This would not only reduce the negative impact of aid on growth but would also promote the competitiveness of the countries for private domestic and foreign capital; thus, reducing reliance on foreign aid. Journal: International Economic Journal Pages: 534-552 Issue: 3 Volume: 34 Year: 2020 Month: 7 X-DOI: 10.1080/10168737.2020.1780292 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1780292 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:3:p:534-552 Template-Type: ReDIF-Article 1.0 Author-Name: Amr Hosny Author-X-Name-First: Amr Author-X-Name-Last: Hosny Title: Remittance Concentration and Volatility: Evidence from 72 Developing Countries Abstract: This paper contributes to the literature by introducing the role of geographic concentration of the source of remittances. Specifically, using data over 2010–2015 for 72 developing countries, we study the impact of (i) large remittances and (ii) the geographic concentration of the source of remittances on economic volatilities. Results suggest that while (i) large remittances can be stabilizing on average, (ii) high remittance concentration from source countries can aggravate economic volatilities in recipient countries. Results are robust to global shocks affecting both source and recipient countries, and volatility in the remittance-sending country. Journal: International Economic Journal Pages: 553-570 Issue: 4 Volume: 34 Year: 2020 Month: 10 X-DOI: 10.1080/10168737.2020.1824008 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1824008 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:4:p:553-570 Template-Type: ReDIF-Article 1.0 Author-Name: Regret Sunge Author-X-Name-First: Regret Author-X-Name-Last: Sunge Author-Name: Nicholas Ngepah Author-X-Name-First: Nicholas Author-X-Name-Last: Ngepah Title: The Impact of Agricultural Trade Liberalization on Agricultural Total Factor Productivity Growth in Africa Abstract: This paper examines the impact of agricultural trade liberalization on agricultural total factor productivity (TFP) growth in Africa using panel data for 13 countries from 2005 to 2016. Our contribution is two-fold. Firstly, we analyse the impact of domestic agriculture support in the spirit of the Agreement on Agriculture. Secondly, we draw attention to the South–South versus South–North debate to the agriculture sector. We examine the impact of trade by source, split between trade within and outside Africa. We compute TFP growth for maize and rice using the Malmquist-data envelopment analysis approach. We then use the dynamic fixed effects approach to estimate panel auto-regressive-distributed-lag models. TFP computations show falling growth rates for both maize and rice. Evidence suggests that domestic agriculture support measures have positive output effects but negative productivity effects. We find that reducing trade-distorting agriculture support coupled with good governance significantly increases TFP growth. Accordingly, we appeal that domestic agriculture support is refocused from producer payments to infrastructure development. Furthermore, we document that South–South trade productivity gains match and can surpass South-North Trade. Hence we emphasize increasing intra-Africa agriculture trade. Journal: International Economic Journal Pages: 571-598 Issue: 4 Volume: 34 Year: 2020 Month: 10 X-DOI: 10.1080/10168737.2020.1836671 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1836671 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:4:p:571-598 Template-Type: ReDIF-Article 1.0 Author-Name: Seong-Kyoon Kim Author-X-Name-First: Seong-Kyoon Author-X-Name-Last: Kim Author-Name: Bong-Joon Yoon Author-X-Name-First: Bong-Joon Author-X-Name-Last: Yoon Author-Name: Jeungil Oh Author-X-Name-First: Jeungil Author-X-Name-Last: Oh Title: A Study on the Decision-Making Behavior of Judge in the Criminal Trial: The Effect of Sentencing Guideline in South Korea Abstract: We study how the adoption of sentencing guidelines affects punishment for crimes. Using 6350 first-trial rulings for criminal cases in South Korea for the period before the adoption of sentencing guidelines (2003–2011) and the period after (2011–2016), we estimate the ordered probit model, classifying punishment into four categories of severity. According to our estimates, punishment for most crimes becomes lighter after the adoption of sentencing guidelines. Among economic crimes, embezzlement and theft receive less severe punishment, while punishment for fraud has strengthened. Of non-economic crimes, perjury and false accusation receive lighter punishment, which would hardly improve the low trust level in South Korean society. Punishment for the obstruction of justice has also weakened, reflecting growing awareness of individual rights among citizens. Judges who prefer severe punishment before the adoption of sentencing guideline maintain their stringent sentences, while those who prefer light punishment lower sentences with confidence due to the sentencing guideline. We call this phenomenon judge’s upward-risk aversion not to exceed the guideline in sentencing. Journal: International Economic Journal Pages: 599-612 Issue: 4 Volume: 34 Year: 2020 Month: 10 X-DOI: 10.1080/10168737.2020.1818273 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1818273 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:4:p:599-612 Template-Type: ReDIF-Article 1.0 Author-Name: Soohyung Lee Author-X-Name-First: Soohyung Author-X-Name-Last: Lee Author-Name: Minhyuk Nam Author-X-Name-First: Minhyuk Author-X-Name-Last: Nam Author-Name: Daeun Jeong Author-X-Name-First: Daeun Author-X-Name-Last: Jeong Author-Name: Wonmoon Lee Author-X-Name-First: Wonmoon Author-X-Name-Last: Lee Title: Does Ramadan Harm Infant Health? Evidence from Ethiopia Abstract: We examine the impact of religious practices on human capital in the context of Ethiopia. We focus on Ramadan, which leads mothers to reduce nutritional intake during the daytime. By exploiting the variation in the extent to which infants were exposed to Ramadan, we estimate the relative disadvantage of Muslim children compared to their non-Muslim counterparts. We find that the exposure to Ramadan in the first trimester has a significant negative effect on the infants’ health outcomes, but not on later life outcomes. Journal: International Economic Journal Pages: 613-633 Issue: 4 Volume: 34 Year: 2020 Month: 10 X-DOI: 10.1080/10168737.2020.1811750 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1811750 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:4:p:613-633 Template-Type: ReDIF-Article 1.0 Author-Name: Kazeem Bello Ajide Author-X-Name-First: Kazeem Bello Author-X-Name-Last: Ajide Author-Name: Olorunfemi Yasiru Alimi Author-X-Name-First: Olorunfemi Yasiru Author-X-Name-Last: Alimi Title: The Conditioning Role of Institutions in Environment-Health Outcomes Nexus in Africa Abstract: This paper examines the conditioning role of institutions in environment-health outcomes nexus in African for a period spanning from 1996 to 2016. The following findings are established using a panel system GMM estimator. First, the unqualified influence of carbon emission on health outcomes is found to be positive and significant statistically. Specifically, it affects human life longevity negatively but positively increases infant deaths and healthcare spending. Second, institutional dysfunctions have an unconditional negative and significant effect on health outcomes. Unambiguously, low regulatory quality and government ineffectiveness weaken life expectancy and amplify the number of infant deaths, while poor corruption control unrestrictedly affects healthcare expenses. Third, the marginal impact of interactions between carbon emission and institutions on life longevity is negative but positive for infant mortality and health expenditure. Lastly, the corresponding net effects of the interaction between environmental pollutants and institutions are equally negative on life expectancy while positive on infant mortality and health expenditure. It means that institutions do not play a supportive role in ameliorating the negative effect of environmental degradation on health outcomes. Thus, strengthening regulatory control, government effectiveness and control of corruption hold the impetus to ensuring environmental balance and improving healthy living and other health-related outcomes. Journal: International Economic Journal Pages: 634-663 Issue: 4 Volume: 34 Year: 2020 Month: 10 X-DOI: 10.1080/10168737.2020.1824007 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1824007 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:4:p:634-663 Template-Type: ReDIF-Article 1.0 Author-Name: Hanhyung Pyo Author-X-Name-First: Hanhyung Author-X-Name-Last: Pyo Author-Name: Minsoo Park Author-X-Name-First: Minsoo Author-X-Name-Last: Park Title: Who Benefits From the Governmental Support Policy for Innovative Firms and for How Long? Evidence From the Korean Venture Certification Program Abstract: This study evaluates the effects of the government’s support policies for innovative firms, for which small firms are eligible by way of a venture certification program in Korea. We analyze whether the effects of the innovative firms’ policies are heterogeneous across several dimensions. Specifically, we examine how policy effects vary along with the venture certification types, firm size, and age. We assess the short- and long-term effects of the certification program on the performance of certified firms. We find that the program is likely to help innovative and young firms enhance their sales, employment and labor productivity over time. Moreover, the impact of the program is bigger for firms that are financed by venture capital, smaller in size (less than 20 employees) and younger (less than 5 years). In contrast, the support policies for innovative firms were somehow ineffective for firms that are research and development-intensive, medium sized (more than 100 and less than 300 employees) or older (more than 10 years) Journal: International Economic Journal Pages: 664-681 Issue: 4 Volume: 34 Year: 2020 Month: 10 X-DOI: 10.1080/10168737.2020.1839940 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1839940 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:4:p:664-681 Template-Type: ReDIF-Article 1.0 Author-Name: Sajid Ali Author-X-Name-First: Sajid Author-X-Name-Last: Ali Author-Name: Zulkornain Yusop Author-X-Name-First: Zulkornain Author-X-Name-Last: Yusop Author-Name: Shivee Ranjanee Kaliappan Author-X-Name-First: Shivee Ranjanee Author-X-Name-Last: Kaliappan Author-Name: Lee Chin Author-X-Name-First: Lee Author-X-Name-Last: Chin Title: Trade-induced Unemployment in Labor-abundant and Capital-abundant OIC Countries: Asymmetric Evidence from Quantile-on-Quantile Regression Abstract: This study aims to analyze the impact of trade openness on unemployment in labor-abundant and capital-abundant countries of Organization of Islamic Cooperation (OIC) by taking the data from 1991 to 2018. A new technique quantile-on-quantile (QQ) is applied to show how quantiles of trade openness asymmetrically affect the quantiles of unemployment by providing an appropriate framework to capture the overall dependence structure. 8 out of 10 capital-abundant countries show a positive association between trade openness and unemployment, while 7 out of 10 labor-abundant countries indicate a negative effect of trade openness on unemployment. Hence, the majority of selected labor-abundant and capital-abundant countries are validating Heckscher-Ohlin theory of international trade. The results show that the asymmetric intensity of trade-induced unemployment varies with countries at both bottom and upper quantiles of the distribution of data that require individual attention in postulating the policies related to trade and unemployment in OIC countries. Journal: International Economic Journal Pages: 682-702 Issue: 4 Volume: 34 Year: 2020 Month: 10 X-DOI: 10.1080/10168737.2020.1841265 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1841265 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:34:y:2020:i:4:p:682-702 Template-Type: ReDIF-Article 1.0 Author-Name: Moon Jung Kim Author-X-Name-First: Moon Jung Author-X-Name-Last: Kim Author-Name: Soohyung Lee Author-X-Name-First: Soohyung Author-X-Name-Last: Lee Title: Can Stimulus Checks Boost an Economy Under Covid-19? Evidence from South Korea Abstract: Various countries have implemented transfer programs to individuals since the Covid-19 outbreaks. However, the extent to which such transfers alleviate economic recessions is unclear. This paper analyzes a South Korean program, which provided vouchers redeemable only at small local businesses. We find that, due to the program, over 30% of households across all income groups increased their food and overall household spending, but the usage restriction may have affected consumer choice as well as competition among businesses. While the employment and sales of small businesses improved, the program’s fiscal sustainability is in question because of the large tax exemption. Journal: International Economic Journal Pages: 1-12 Issue: 1 Volume: 35 Year: 2021 Month: 01 X-DOI: 10.1080/10168737.2020.1864435 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1864435 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:1:p:1-12 Template-Type: ReDIF-Article 1.0 Author-Name: Hakan Yilmazkuday Author-X-Name-First: Hakan Author-X-Name-Last: Yilmazkuday Title: Decomposing the Gains From Trade Through the Standard Gravity Variables Abstract: Using the implications of a trade model, this paper measures the gains from trade through the standard gravity variables. Theoretically, it is shown that such gains can be calculated by using the estimated coefficients of these variables in a gravity regression, together with the bilateral expenditure shares of countries investigated. Empirically, the results show that the total actual gains through all gravity variables in the world have increased from about $ 1\% $ 1% in 1950s to about $ 5\% $ 5% as of 2015 that can be decomposed as $ 3.5\% $ 3.5% through proximity and $ 1.5\% $ 1.5% through other gravity variables. Gains through free trade agreements (FTAs) have started dominating among these other variables starting from 1990s, following the Uruguay Round. Across countries, the total gains of OECD countries are about 1.5 times those of others, whereas the total gains of European countries are more than 10 times those of Pacific countries. Calculations based on the future potential gains from trade through policy-oriented gravity variables further suggest that there is room for an additional $ 0.8\% $ 0.8% or $ 0.4\% $ 0.4% of a welfare gain in the world through having free trade agreements or using common currencies, respectively. Journal: International Economic Journal Pages: 13-45 Issue: 1 Volume: 35 Year: 2021 Month: 01 X-DOI: 10.1080/10168737.2020.1855461 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1855461 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:1:p:13-45 Template-Type: ReDIF-Article 1.0 Author-Name: Kemal Türkcan Author-X-Name-First: Kemal Author-X-Name-Last: Türkcan Author-Name: Hülya Saygılı Author-X-Name-First: Hülya Author-X-Name-Last: Saygılı Title: Transportation Mode Choice and International Fragmentation of Production: Evidence from a Developing Country Abstract: The objective of this study is to analyze the effects of fragmentation of production measured by the parts and components trade on the choice of transportation mode including air, sea and road. The paper attempts to account for the advantages and disadvantages of alternative transportation modes in short-, medium- and long-distance trade. Using a detailed data set (Harmonized System12-digit product level statistics for the period 2006–2014 and 143 countries) of Turkey’s machinery exports, we show that fragmentation of production plays a significant role in the selection of the transportation mode. In particular, road transportation with good infrastructure is a significant trade facilitating mode of transportation for nearby trade partners when trade involves P&C and bulky products. Journal: International Economic Journal Pages: 46-72 Issue: 1 Volume: 35 Year: 2021 Month: 01 X-DOI: 10.1080/10168737.2020.1870522 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1870522 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:1:p:46-72 Template-Type: ReDIF-Article 1.0 Author-Name: Manel Youssef Author-X-Name-First: Manel Author-X-Name-Last: Youssef Author-Name: Khaled Mokni Author-X-Name-First: Khaled Author-X-Name-Last: Mokni Title: On the Nonlinear Impact of Oil Price Shocks on the World Food Prices Under Different Markets Conditions Abstract: This paper investigates the impact of oil price shocks on the world food prices. We use the structural VAR model to disentangle oil price shocks into supply, aggregate demand, and oil-specific demand-driven shocks. Moreover, we employ a new approach based on the Markov regime-switching quantile regression (MRS-QR) model to investigate the response of food prices to different oil price shocks. Based on monthly data from 1992 to 2018, results show that the reaction of food prices to different structural oil shocks depends on the oil price regimes and varies in significance, sign, and size throughout the food market conditions. Besides, the increases in regression coefficients and smoothed probability during food and oil crisis periods confirm the existence of contagion effects between oil and food markets. Moreover, we find that the supply and aggregate demand shocks do not show a strong contribution to the presence of this phenomenon. Conversely, oil-specific demand shocks represent the main factor that contributes to contagion between oil and food markets. Journal: International Economic Journal Pages: 73-95 Issue: 1 Volume: 35 Year: 2021 Month: 01 X-DOI: 10.1080/10168737.2020.1870524 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1870524 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:1:p:73-95 Template-Type: ReDIF-Article 1.0 Author-Name: Ibrahim Ngouhouo Author-X-Name-First: Ibrahim Author-X-Name-Last: Ngouhouo Author-Name: Tii Nchofoung Author-X-Name-First: Tii Author-X-Name-Last: Nchofoung Author-Name: Arsène Aurelien Njamen Kengdo Author-X-Name-First: Arsène Aurelien Author-X-Name-Last: Njamen Kengdo Title: Determinants of Trade Openness in Sub-Saharan Africa: Do Institutions Matter? Abstract: This paper aims to analyse the determinants of trade openness in Sub-Saharan Africa (SSA) countries focusing on the role play by domestic institutions. To achieve this, the Generalized Methods of Moments (GMM) is carried out on 36 SSA countries over the period 1996-2017. The results of our estimation reveal that domestic institutions as a composite index determines trade openness as a composite share of Squalli and Wilson (2011). In addition, government effectiveness, Regulatory quality and rule of law were all enhancing on trade openness. Moreover, access to sea, foreign direct investment, and trade openness lagged by one period all significantly determine trade openness in our estimations, with all these effects positive. When trade share was considered as a robustness check, inflation and population growth were further found to be significantly determine trade openness, whereas GDP per capital was significantly trade enhancing. This result was robust to alternative institutional measures and sensitive to the choices of countries and sample periods considered. The policy implications of study engaged the different states of SSA to focus on improving the quality of their domestic institutions in elaborating their international trade policies. Journal: International Economic Journal Pages: 96-119 Issue: 1 Volume: 35 Year: 2021 Month: 01 X-DOI: 10.1080/10168737.2020.1858323 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1858323 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:1:p:96-119 Template-Type: ReDIF-Article 1.0 Author-Name: Emmanuel K.K. Lartey Author-X-Name-First: Emmanuel K.K. Author-X-Name-Last: Lartey Author-Name: Getachew Nigatu Author-X-Name-First: Getachew Author-X-Name-Last: Nigatu Title: Remittances and manufacturing sector growth in sub-Saharan Africa Abstract: This paper analyzes the link between remittances and the growth of manufacturing value-added (MVA) and explores whether the quality of institutions and exchange rate policy matter for the dynamics of the relationship in sub-Saharan African (SSA) countries. The findings suggest that when the level of financial development is accounted for, remittances have a positive impact on MVA. The standalone effect of remittances on MVA is, however, negative. The results also suggest that there is a positive influence of exchange rate flexibility on the dynamics between remittances and MVA. Furthermore, improvement in the business environment seems to matter for the performance of the manufacturing sector, but it is not significant to the dynamics between remittances and MVA. The development of the financial sector, on that account, emerges as an important factor influencing the impact of remittances on the growth of the manufacturing sector in SSA countries. Journal: International Economic Journal Pages: 120-138 Issue: 1 Volume: 35 Year: 2021 Month: 01 X-DOI: 10.1080/10168737.2020.1870523 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1870523 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:1:p:120-138 Template-Type: ReDIF-Article 1.0 Author-Name: The Editors Title: Retraction: How Can Public Education Spending Affects Moroccan and Tunisian GDP per Capita? ARDL Approach Journal: International Economic Journal Pages: 139-139 Issue: 1 Volume: 35 Year: 2021 Month: 01 X-DOI: 10.1080/10168737.2020.1868739 File-URL: http://hdl.handle.net/10.1080/10168737.2020.1868739 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:1:p:139-139 Template-Type: ReDIF-Article 1.0 Author-Name: Adel Ifa Author-X-Name-First: Adel Author-X-Name-Last: Ifa Author-Name: Imene Guetat Author-X-Name-First: Imene Author-X-Name-Last: Guetat Title: RETRACTED ARTICLE: How Can Public Education Spending Affects Moroccan and Tunisian GDP per Capita? ARDL Approach Journal: International Economic Journal Pages: i-xv Issue: 1 Volume: 35 Year: 2021 Month: 01 X-DOI: 10.1080/10168737.2018.1517815 File-URL: http://hdl.handle.net/10.1080/10168737.2018.1517815 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:1:p:i-xv Template-Type: ReDIF-Article 1.0 Author-Name: Chul-Woo Kwon Author-X-Name-First: Chul-Woo Author-X-Name-Last: Kwon Author-Name: Uk Hwang Author-X-Name-First: Uk Author-X-Name-Last: Hwang Title: The Threat of Offshoring on the Environmental Regulation Abstract: This paper aims to analyze how the threat of offshoring can lead policymakers to adopt more lenient emissions tax policies. This study focuses on analyzing the relationship between the stringency of environmental policies and firms’ strategic offshoring decisions when a government is concerned about the negative effects of increased offshoring such as domestic job losses. The analysis is based on an archetypal proximity concentration framework that has been enhanced by considering environmental regulations and abatement technology. The results imply that the threat of offshoring is more likely to impact emissions tax rates when firms experience higher productivity, or when offshoring leads to a significant level of domestic unemployment. That is, in these cases, the threat of offshoring is more likely to make the government lower emissions tax rates more than the optimal tax rate. Although the direct impact of offshoring on environmental policies is studied in many related works, the indirect impact of offshoring-that is, the threat of offshoring- on environmental policies has been seldom studied. Journal: International Economic Journal Pages: 155-170 Issue: 2 Volume: 35 Year: 2021 Month: 04 X-DOI: 10.1080/10168737.2021.1910722 File-URL: http://hdl.handle.net/10.1080/10168737.2021.1910722 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:2:p:155-170 Template-Type: ReDIF-Article 1.0 Author-Name: Mohsen Bahmani-Oskooee Author-X-Name-First: Mohsen Author-X-Name-Last: Bahmani-Oskooee Author-Name: Amirhossein Mohammadian Author-X-Name-First: Amirhossein Author-X-Name-Last: Mohammadian Title: On the Link Between Policy Uncertainty and Domestic Production in G7 Countries: An Asymmetry Analysis Abstract: Previous studies have assessed the impact of policy uncertainty on consumption and investment in G7 countries. In this study, we assess its impact on domestic output in the same countries. Furthermore, we argue that its impact could be asymmetric, implying that increased uncertainty affects domestic output at a different rate than decreased uncertainty. Unlike consumption and investment, we find the unanimous outcome in all G7 countries that increased uncertainty hurts domestic output and decreased uncertainty boosts it, though significant long-run asymmetric evidence was found only in the cases of Canada, Japan, and the U.S. Thus, any policy aimed at reducing uncertainty will be growth-enhancing. Journal: International Economic Journal Pages: 242-258 Issue: 2 Volume: 35 Year: 2021 Month: 04 X-DOI: 10.1080/10168737.2021.1913622 File-URL: http://hdl.handle.net/10.1080/10168737.2021.1913622 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:2:p:242-258 Template-Type: ReDIF-Article 1.0 Author-Name: David Silei Author-X-Name-First: David Author-X-Name-Last: Silei Title: Allocation of the Public R&D Budget: The Impact of International Competitive Advantages and R&D Alliances Abstract: I consider a two-country model, in which two asymmetric firms invest in R&D to increase their competitiveness and compete over the supply of a homogeneous product, and the government grants R&D subsidies to increase welfare. In this setting I show that optimal R&D policy is affected by industrywide international competitive advantages. Similar to conventional wisdom on strategic trade policy, competitive advantages have a positive impact on the optimal amount of R&D subsidy in the case of R&D competition. With international R&D cooperation, this conclusion is reversed: subsidising the more competitive firm may have, if any, very little impact on domestic welfare. Journal: International Economic Journal Pages: 171-204 Issue: 2 Volume: 35 Year: 2021 Month: 04 X-DOI: 10.1080/10168737.2021.1916773 File-URL: http://hdl.handle.net/10.1080/10168737.2021.1916773 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:2:p:171-204 Template-Type: ReDIF-Article 1.0 Author-Name: Sanjeev Vasudevan Author-X-Name-First: Sanjeev Author-X-Name-Last: Vasudevan Author-Name: Suresh Babu Manalaya Author-X-Name-First: Suresh Babu Author-X-Name-Last: Manalaya Title: Trade Effects of Eurasian Economic Union and Global Production Sharing: A Gravity Analysis Abstract: This study examines the effects of the Eurasian Economic Union (EAEU) on global production sharing and trade in parts and components. With a panel dataset of disaggregated bilateral exports of EAEU members and 28 partners, we estimate an augmented gravity model for 2010–2017. To mitigate endogeneity issues, we employ the Hausman and Taylor Estimator. The study has two important findings. First, there are significant trade diversion effects on the exports of parts and components. Second, the formation of EAEU has resulted in a reduction in intra-bloc exports. In addition to these, we find that market size, inter-country differentials of income, business-friendly climate, and cultural similarities are the other significant determinants of bilateral trade. Based on the empirical analysis, we propose that the EAEU normalise the Common External Tariff below the current level to minimise trade diversion. Journal: International Economic Journal Pages: 223-241 Issue: 2 Volume: 35 Year: 2021 Month: 04 X-DOI: 10.1080/10168737.2021.1901763 File-URL: http://hdl.handle.net/10.1080/10168737.2021.1901763 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:2:p:223-241 Template-Type: ReDIF-Article 1.0 Author-Name: Christian-Lambert Nguena Author-X-Name-First: Christian-Lambert Author-X-Name-Last: Nguena Author-Name: Fulbert Tchana Tchana Author-X-Name-First: Fulbert Author-X-Name-Last: Tchana Tchana Author-Name: Albert G. Zeufack Author-X-Name-First: Albert G. Author-X-Name-Last: Zeufack Title: Housing Finance and Inclusive Growth in Africa: Benchmarking, Determinants and Effects Abstract: Using a panel database of 48 Sub-Saharan African countries from 2000 to 2012 that we partially constructed, this paper analyses the structure of housing finance in Africa, its determinants, and its impact on inclusive growth. We find that market capitalization and urbanization are key positive determinants of housing finance, while a post-conflict environment is conducive to greater housing finance development. This result suggests that housing finance is driven by standard market forces of demand and supply. Besides, we find that housing finance development in Africa is not yet an effective tool for reducing economic inequality, at its current, very earlier stage. However, we show that above a given threshold, housing finance could be efficient at reducing inequality. Finally, there is a slightly positive relationship between housing finance and greater economic development in Africa. All these findings suggest that policies to boost housing finance development in Africa would be fruitful in the medium to long terms. Journal: International Economic Journal Pages: 259-287 Issue: 2 Volume: 35 Year: 2021 Month: 04 X-DOI: 10.1080/10168737.2021.1916774 File-URL: http://hdl.handle.net/10.1080/10168737.2021.1916774 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:2:p:259-287 Template-Type: ReDIF-Article 1.0 Author-Name: Hanh Song Thi Pham Author-X-Name-First: Hanh Song Thi Author-X-Name-Last: Pham Author-Name: Thanh Le Author-X-Name-First: Thanh Author-X-Name-Last: Le Author-Name: Loan Quynh Thi Nguyen Author-X-Name-First: Loan Quynh Thi Author-X-Name-Last: Nguyen Title: Monetary Policy and Bank Liquidity Creation: Does Bank Size Matter? Abstract: This paper investigates the effect of monetary policy on liquidity creation of commercial banks and if the effect is conditional on bank size. The paper uses a dataset covering 23 Vietnamese commercial banks during the period 2007–2017 collected from various sources including State Bank of Vietnam, International Monetary Fund, SNL Financial database (provided by SNL Company), Vietnam General Statistic Office and banks’ annual reports. Different econometric techniques are employed to analyse the data. Obtained results indicate that a contractionary monetary policy could lead to a decrease in bank liquidity creation. This result is less pronounced with larger banks. In particular, among three monetary policy instruments employed in Vietnam, an increase in the base rate is significantly associated with a contraction in bank liquidity creation; open market operations may have a marginal impact while required reserve ratio is ineffective because of its unchanged value throughout the period of the study. This paper is among the first, providing an insight into each monetary policy instrument's role in influencing bank liquidity creation in the context of an emerging economy. Journal: International Economic Journal Pages: 205-222 Issue: 2 Volume: 35 Year: 2021 Month: 04 X-DOI: 10.1080/10168737.2021.1901762 File-URL: http://hdl.handle.net/10.1080/10168737.2021.1901762 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:2:p:205-222 Template-Type: ReDIF-Article 1.0 Author-Name: Minjung Park Author-X-Name-First: Minjung Author-X-Name-Last: Park Title: Identification and Estimation of Installed-Base Effects for Product Adoption Under Sample Attrition and Homophily Abstract: This paper studies identification and estimation of installed-base effects for product adoption using group-level panel data in the presence of endogenous sample attrition and homophily. After exploring conditions under which installed-base effects are identified using group-level panel data in the considered setting, I propose a modified BLP approach for estimation. The proposed approach accounts for endogenously changing composition of remaining group members in the simulation of predicted adoption rates, thereby addressing sample attrition. To address homophily, the proposed method performs first-differencing within a given group and uses lags and lagged differences of the installed base as instruments. I present Monte Carlo results to numerically demonstrate the identification issues as well as the performance of the proposed estimation method. Journal: International Economic Journal Pages: 141-154 Issue: 2 Volume: 35 Year: 2021 Month: 04 X-DOI: 10.1080/10168737.2021.1907606 File-URL: http://hdl.handle.net/10.1080/10168737.2021.1907606 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:2:p:141-154 Template-Type: ReDIF-Article 1.0 Author-Name: Kyoo il Kim Author-X-Name-First: Kyoo il Author-X-Name-Last: Kim Author-Name: Jin Ho Park Author-X-Name-First: Jin Ho Author-X-Name-Last: Park Author-Name: Kyung Ho Song Author-X-Name-First: Kyung Ho Author-X-Name-Last: Song Title: Aggregate Productivity Growth and Firm Dynamics in Korean Manufacturing 2007–2017 Abstract: We study aggregate productivity growth of the Korean manufacturing industry for the 2007–2017 period after the Great Recession. We find the nature of such growth was quite different for two measures of productivity. For labor productivity, most of growth comes from productivity changes among surviving firms while, for TFP, most of the productivity growth comes from that of new entrants. We observe interesting industry dynamics, as exiting firms contributed positively to aggregate productivity growth, which suggests that the market had gradually eliminated firms of lower productivity in this period. Using the dynamic Olley and Pakes (1996. The dynamics of productivity in the telecommunications equipment industry. Econometrica, 64, 1263–1298.) decomposition, we find that a substantial productivity growth after the Great Recession was due to market share reallocations between firms, but this between-firm contribution has reduced since the recovery. Our industry sector level analysis also demonstrates that there has been heterogeneous productivity growth patterns and components across manufacturing sectors. Finally, we speculate that the wage level also plays a role as a moderating or accelerating factor for different productivity growth paths among surviving, entering, and exiting firms. Journal: International Economic Journal Pages: 289-313 Issue: 3 Volume: 35 Year: 2021 Month: 07 X-DOI: 10.1080/10168737.2021.1952641 File-URL: http://hdl.handle.net/10.1080/10168737.2021.1952641 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:3:p:289-313 Template-Type: ReDIF-Article 1.0 Author-Name: Kojun Hamada Author-X-Name-First: Kojun Author-X-Name-Last: Hamada Author-Name: Yoshitomo Ogawa Author-X-Name-First: Yoshitomo Author-X-Name-Last: Ogawa Author-Name: Mitsuyoshi Yanagihara Author-X-Name-First: Mitsuyoshi Author-X-Name-Last: Yanagihara Title: Location Tax/Subsidy Competition: When Governments Set Their Policies After Firms Choose Their Locations Abstract: In this study, we examine the location tax/subsidy competition between two countries when governments set tax or subsidy policies after firms have decided their location using a third-market model. The previous literature on tax competition with the choice of production location of firms has relied on a model in which governments set tax/subsidy policies before firms choose their production location between countries. However, if governments cannot commit to their policies in advance, the timing of decision-making changes so that governments determine their tax/subsidy rates after firms choose their location. Considering the different timings of the game, we show the following results. First, firms choose to stay in the countries in which they were originally established and governments subsidize the firms located in their countries. As a result, exporting countries fall into excessive subsidization competition, whereas firms can obtain higher profits than in the no-subsidization case. Second, when tax/subsidy authorities are tax-revenue maximizers, there are two different equilibria in tax competition in which each firm chooses to locate in different countries. Social welfare is larger when governments are tax-revenue maximizers than when they are social-welfare maximizers, whereas firms' profits are smaller when governments are tax-revenue maximizers. Journal: International Economic Journal Pages: 323-343 Issue: 3 Volume: 35 Year: 2021 Month: 07 X-DOI: 10.1080/10168737.2021.1928265 File-URL: http://hdl.handle.net/10.1080/10168737.2021.1928265 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:3:p:323-343 Template-Type: ReDIF-Article 1.0 Author-Name: MD Fourkan Author-X-Name-First: MD Author-X-Name-Last: Fourkan Author-Name: Myoung-Jin Keay Author-X-Name-First: Myoung-Jin Author-X-Name-Last: Keay Author-Name: Na Kyeong Lee Author-X-Name-First: Na Kyeong Author-X-Name-Last: Lee Title: Decreased Emergency Department Use Following Medicaid Expansion: Evidence from Oregon's Health Insurance Experiment Abstract: In this study, we identify the relationship between Medicaid expansion and emergency department use based on the data from Oregon Health Program. Among the relevant studies, Taubman et al. (2014) provide the positive relationship between two objects with a rather limited approach that leads to the under-identification problem. To avoid the problem, we incorporate a copula regression analysis with an additional endogenous variable. As a result, we find that Medicaid expansion leads to a decrease in emergency department use, which is the opposite result of Taubman et al. (2014). Journal: International Economic Journal Pages: 314-322 Issue: 3 Volume: 35 Year: 2021 Month: 07 X-DOI: 10.1080/10168737.2021.1958246 File-URL: http://hdl.handle.net/10.1080/10168737.2021.1958246 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:3:p:314-322 Template-Type: ReDIF-Article 1.0 Author-Name: Yang Seung Lee Author-X-Name-First: Yang Seung Author-X-Name-Last: Lee Title: Entrepreneurs, Managers, and the Firm Size Distribution Abstract: Small firms can contribute to job creation and aggregate income. However, small firms are volatile and only a fraction of those can transition into larger firms, which create high-paying jobs. Entrepreneurs self-select for the transition. This study examines the pattern of entrepreneur self-selection. The main determinants of the self-selection are ability distribution of entrepreneurs and business environment, which represents skill distribution of laborers and social capital. This study predicts that firm-size distribution is truncated with the entrepreneur self-selection and aggregate income is larger when the business environment is better. This study contributes to the literature on firm-size distribution. Journal: International Economic Journal Pages: 367-390 Issue: 3 Volume: 35 Year: 2021 Month: 07 X-DOI: 10.1080/10168737.2021.1958896 File-URL: http://hdl.handle.net/10.1080/10168737.2021.1958896 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:3:p:367-390 Template-Type: ReDIF-Article 1.0 Author-Name: Fernando Barros Jr Author-X-Name-First: Fernando Author-X-Name-Last: Barros Jr Author-Name: Rafael Castilho Author-X-Name-First: Rafael Author-X-Name-Last: Castilho Author-Name: Daniel Galveas Author-X-Name-First: Daniel Author-X-Name-Last: Galveas Title: On the Regulation of Checked Baggage in the Airline Industry Abstract: In 2017, the Brazilian civil aviation agency changed the checkedbaggage policy, and airline companies would no longer be required to offer free baggage for its passengers. This paper builds a model to study the effects on the market equilibrium of this change in regulation. We suppose that firms operate in an oligopoly market and compete by choosing tickets and baggage quantity as in a Cournot model. Firms had to offer a free quota of baggage, which was set to zero with the deregulation. Both products enter in the firm's cost function. First, we show that the firm's profits do not change with the liberalization policy. Then, we calibrate the model's parameters using Brazilian data. Backed up by numerical simulations, we show that allowing firms to charge baggage separately from tickets results in a decrease in ticket prices (but an increase in total prices) and an increase in the amount of tickets sold in the market. Consumers are expected to have a larger surplus, hence increasing the market welfare. Our results are robust to variations in the parameters of the model.Highlights The Brazilian civil aviation agency changed the checked baggage policy;Companies are no longer be required to offer free baggage for its passengers;We set a model where firms operate in an oligopoly and study airline industry deregulation;Firm's profits do not change with the liberalization policy;There is a decrease in ticket prices (but an increase in total prices) and an increase in amount of tickets sold in the market. Journal: International Economic Journal Pages: 344-366 Issue: 3 Volume: 35 Year: 2021 Month: 07 X-DOI: 10.1080/10168737.2021.1962949 File-URL: http://hdl.handle.net/10.1080/10168737.2021.1962949 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:3:p:344-366 Template-Type: ReDIF-Article 1.0 Author-Name: Pablo Agnese Author-X-Name-First: Pablo Author-X-Name-Last: Agnese Author-Name: Jana Hromcová Author-X-Name-First: Jana Author-X-Name-Last: Hromcová Title: Offshoring, Welfare, and Flexibility in the Context of US Protectionism Abstract: We reexamine the effects of offshoring in the US economy in the aftermath of the 2008 crisis. We use a matching model with endogenous adjustment of educational skills while distinguishing between offshoring of high and low-skill activities. We first show that offshoring leads to a restructuring of the economy through a change in the wage premium where overall welfare is improved. Moreover, in a policy exercise, we show that, if offshoring were to be opposed by a protectionist agenda, the resulting welfare losses could be counterbalanced by increased labor flexibility. Journal: International Economic Journal Pages: 391-410 Issue: 4 Volume: 35 Year: 2021 Month: 10 X-DOI: 10.1080/10168737.2021.1971281 File-URL: http://hdl.handle.net/10.1080/10168737.2021.1971281 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:4:p:391-410 Template-Type: ReDIF-Article 1.0 Author-Name: Oasis Kodila-Tedika Author-X-Name-First: Oasis Author-X-Name-Last: Kodila-Tedika Author-Name: Sherif Khalifa Author-X-Name-First: Sherif Author-X-Name-Last: Khalifa Title: Official Visits and Democracy Abstract: This paper examines whether the number of official visits to and from the U.S. allows the country to adopt a more democratic system of governance. To achieve its objective, the paper develops a model that derives the conditions under which a host invites a guest to persuade or pressure for democratic improvement, and the conditions under which the guest accepts an invitation to visit and decides to improve the quality of democratic governance after the visit. To test our hypothesis, we introduce novel variables that indicate the number of leader’s trips to the U.S., and the number of visits of U.S. Presidents and Secretaries of State to the country, from 1960 to 2015. The estimation results show that the official visits have a statistically significant positive effect on democracy. These results are robust. The paper also uses 3SLS to deal with potential endogeneity. The estimation confirms our previous findings that the official visits have a statistically significant positive effect on democracy. Finally, we explore the channels of transmission and find that American administrations use bilateral trade flows and U.S. aid as an incentive for countries to democratize. This supports our model predictions. Journal: International Economic Journal Pages: 434-468 Issue: 4 Volume: 35 Year: 2021 Month: 10 X-DOI: 10.1080/10168737.2021.1977837 File-URL: http://hdl.handle.net/10.1080/10168737.2021.1977837 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:4:p:434-468 Template-Type: ReDIF-Article 1.0 Author-Name: Henry Laverde-Rojas Author-X-Name-First: Henry Author-X-Name-Last: Laverde-Rojas Author-Name: Juan C. Correa Author-X-Name-First: Juan C. Author-X-Name-Last: Correa Title: Economic Complexity, Economic Growth, and CO2 Emissions: A Panel Data Analysis Abstract: Reducing global warming effects without jeopardizing economic prosperity demands the analysis of the link between these factors. Environmental degradation and economic growth are thought to be related in a non-linear manner, following an inverted-U pattern called the ‘Environmental Kuznets Curve’ (EKC). Despite the many studies seeking empirical support for this relationship, the literature does not provide conclusive findings. By presenting the Economic Complexity Index (ECI) as an explanatory variable, this paper aims at providing a comprehensive analysis of EKC from 86 countries with different development levels, covering the period between 1971 and 2014. Different statistical estimation techniques were used, including an Adaptive Neuro-Fuzzy Inference System (ANFIS) model, dynamic panel data techniques, and the Sasabuchi–Lind–Mehlum (SLM) test. The results show no clear evidence supporting the idea of EKC, neither for production volumes nor for production sophistication, as captured by ECI. Nonetheless, when ECI increases, pollution levels drop monotonously only for developed countries. Journal: International Economic Journal Pages: 411-433 Issue: 4 Volume: 35 Year: 2021 Month: 10 X-DOI: 10.1080/10168737.2021.1975303 File-URL: http://hdl.handle.net/10.1080/10168737.2021.1975303 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:4:p:411-433 Template-Type: ReDIF-Article 1.0 Author-Name: Hakan Yilmazkuday Author-X-Name-First: Hakan Author-X-Name-Last: Yilmazkuday Title: Drivers of Global Trade: A Product-Level Investigation Abstract: This paper investigates the drivers of global trade at the six-digit product level. The identification is achieved first by estimating the log-linear product-level bilateral trade implications of a model and second by aggregating the fitted estimation results across bilateral countries using Taylor series to obtain global measures in levels for each product. The empirical results suggest that supply-side effects (capturing production or exporting costs in source countries) contribute to changes in global trade more than six times the demand-side effects (capturing economic activity or preferences in destination countries) and more than ten times the effects of bilateral trade costs (capturing bilateral protectionism measures). Several product-level implications follow. Journal: International Economic Journal Pages: 469-485 Issue: 4 Volume: 35 Year: 2021 Month: 10 X-DOI: 10.1080/10168737.2021.1983631 File-URL: http://hdl.handle.net/10.1080/10168737.2021.1983631 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:4:p:469-485 Template-Type: ReDIF-Article 1.0 Author-Name: N. Abilov Author-X-Name-First: N. Author-X-Name-Last: Abilov Title: A Medium-Scale Bayesian DSGE Model for Kazakhstan with Incomplete Exchange Rate Pass-Through Abstract: This paper analyzes the sources of business cycle fluctuations in Kazakhstan and the relevance of various frictions in the economy using a medium-scale DSGE model with imperfect exchange rate pass-through. We estimate the model via Bayesian methods and present estimates of structural parameters of the model and highlight the role of various shocks in explaining the actual dynamics of observed variables. In the absence of quality and deseasonalized data, we show that the DSGE model with time-varying markups possesses a reasonable level of accuracy as the one-sided Kalman filter predictions match the dynamics of the observable variables. Posterior estimates of the model show that the long-run growth rate of output is 4.5% per annum and the exchange rate pass-through to domestic prices is between 21% and 35% within a quarter. We also find that risk premium shocks have played an important role in determining the inflation rate, the interest rate and the real exchange rate in the economy since 2015. Journal: International Economic Journal Pages: 486-522 Issue: 4 Volume: 35 Year: 2021 Month: 10 X-DOI: 10.1080/10168737.2021.1999298 File-URL: http://hdl.handle.net/10.1080/10168737.2021.1999298 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:35:y:2021:i:4:p:486-522 Template-Type: ReDIF-Article 1.0 Author-Name: Jungwon Yeo Author-X-Name-First: Jungwon Author-X-Name-Last: Yeo Title: The Factors of Revenue-Sharing Contracts in Franchising: Evidence from the Korean Franchise Industry Abstract: I examine whether the existing theories on revenue-sharing contracts can explain variations in the terms of franchise contracts, including royalty rates, the degree of revenue-sharing, and the mix of franchising and company ownership (contract-mixing), in the Korean franchise industry. This study utilizes a unique dataset that I assembled on 300 franchise systems in the franchised restaurant industry in Korea. I find the capital constraint-based explanation is more consistent in explaining the franchise fee, whereas the moral hazard-based explanation is more consistent in explaining the royalty rate. Also, the contract length is found one of the most significant explanatory variables. These findings confirm the role of revenue-sharing as a tool to align the contracting parties' incentives and suggest it be a commitment device to a continued collaborative partnership between franchisors and franchisees. Journal: International Economic Journal Pages: 77-102 Issue: 1 Volume: 36 Year: 2022 Month: 01 X-DOI: 10.1080/10168737.2022.2029929 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2029929 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:1:p:77-102 Template-Type: ReDIF-Article 1.0 Author-Name: Mike Hsu Author-X-Name-First: Mike Author-X-Name-Last: Hsu Author-Name: Javier Pereira Author-X-Name-First: Javier Author-X-Name-Last: Pereira Title: Multidimensional Financial Development, Trade Liberalization, and Productivity Growth Abstract: Only recently have researchers turned their attention to questions of financial development understood as a multidimensional concept: a combination of depth, access, efficiency, and diversity of financial providers. Using a broad-based index of financial development, we document how the different aspects of financial development affect the relationship between trade and productivity growth across countries. We find that for richer countries, financial depth and access strengthen the effects of trade openness on growth, while for poorer countries, only the degree of efficiency matters. Our results are robust to changes in sample, trade measures, and estimation strategies, and suggest the source of comparative advantage from financial development is different for countries with different levels of income. Journal: International Economic Journal Pages: 103-128 Issue: 1 Volume: 36 Year: 2022 Month: 01 X-DOI: 10.1080/10168737.2021.2024587 File-URL: http://hdl.handle.net/10.1080/10168737.2021.2024587 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:1:p:103-128 Template-Type: ReDIF-Article 1.0 Author-Name: In Kyung Kim Author-X-Name-First: In Kyung Author-X-Name-Last: Kim Title: Effects of Chain Affiliation in the Movie Theater Industry Abstract: In this paper, I empirically study the effect of chain affiliation on product variety and price in the movie theater industry. Using longitudinal data on Korean movie theaters, I find that movie variety in a theater increases by 3.2–5.5% after the theater joins a chain. Admission price, however, does not change after chain affiliation. These findings imply that consumers may benefit from the growing dominance of chain-affiliated theaters in recent decades. The results also suggest that the regulatory authorities should carefully examine the trade-off between the increase in market power and efficiency gains when evaluating the implications of chain affiliation. Journal: International Economic Journal Pages: 19-38 Issue: 1 Volume: 36 Year: 2022 Month: 01 X-DOI: 10.1080/10168737.2022.2029930 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2029930 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:1:p:19-38 Template-Type: ReDIF-Article 1.0 Author-Name: Gabriel K. Mafie Author-X-Name-First: Gabriel K. Author-X-Name-Last: Mafie Title: The Impact of Climate Change on Agricultural Productivity in Tanzania Abstract: This paper investigates the impact of climate change on agricultural productivity in Tanzania focusing on maize and paddy as the staple food crops. We use Tanzania National Panel Survey (NPS) data for 2008/9, 2010/11, and 2012/13. The results suggest a significant impact of weather variables – temperature and rainfall, and their shocks on agricultural productivity in Tanzania. Also, farmers’ education appears to reduce the impact of temperature shocks on productivity. These findings imply a need for policy intervention to ensure that farmers are equipped for climate change adaptation as well as the use of modern farming technologies and inputs. Journal: International Economic Journal Pages: 129-145 Issue: 1 Volume: 36 Year: 2022 Month: 01 X-DOI: 10.1080/10168737.2021.2010229 File-URL: http://hdl.handle.net/10.1080/10168737.2021.2010229 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:1:p:129-145 Template-Type: ReDIF-Article 1.0 Author-Name: Quang Dong Nguyen Author-X-Name-First: Quang Dong Author-X-Name-Last: Nguyen Author-Name: Thi Ha Tran Author-X-Name-First: Thi Ha Author-X-Name-Last: Tran Author-Name: Quang Huy Nguyen Author-X-Name-First: Quang Huy Author-X-Name-Last: Nguyen Title: Do Changes in the Exchange Rate Have an Asymmetric Effect on the Trade Balance between Vietnam and Japan? Abstract: The paper examines the impact of changes in the exchange rate on Vietnam’s trade balance with Japan based on the employment of both aggregate and industry-level data in a set of linear and nonlinear autoregressive distributed lag models. The results from the models indicate a degree of bias in regression when using aggregate data and a linear ARDL approach. Among the 19 industries under consideration, the NARDL model presents different responses to exchange rate movements from 16 industries, which account for 46% of imports and 63% of exports between Vietnam and Japan. Using aggregate data, the model shows that the exchange rate positively affects the Vietnam-Japan trade balance in the case of currency depreciation, whereas currency appreciation has no impact on the trade balance. Thus, it is concluded that the exchange rate is an effective tool to stimulate exports and improve the trade balance between Vietnam and Japan. Journal: International Economic Journal Pages: 59-76 Issue: 1 Volume: 36 Year: 2022 Month: 01 X-DOI: 10.1080/10168737.2021.2012222 File-URL: http://hdl.handle.net/10.1080/10168737.2021.2012222 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:1:p:59-76 Template-Type: ReDIF-Article 1.0 Author-Name: Haiwen Zhou Author-X-Name-First: Haiwen Author-X-Name-Last: Zhou Title: The Choice of Technology and Economic Geography Abstract: Empirical evidence shows that firms located in regions with larger population size are on average larger and more productive. To explain this empirical observation, firms producing intermediate goods are assumed to choose their technologies with different levels of fixed and marginal costs. In this general equilibrium model of economic geography, intermediate good producers engage in oligopolistic competition. The model is tractable and leads to interesting and analytical results. An intermediate good producer in the region with a higher population produces a higher level of output and has a lower marginal cost of production regardless of the existence of regional trade. With regional trade, if a worker moves from the region with a lower number of workers to the region with a higher number of workers, intermediate good producers in both regions choose less advanced technologies. Journal: International Economic Journal Pages: 1-18 Issue: 1 Volume: 36 Year: 2022 Month: 01 X-DOI: 10.1080/10168737.2021.2018013 File-URL: http://hdl.handle.net/10.1080/10168737.2021.2018013 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:1:p:1-18 Template-Type: ReDIF-Article 1.0 Author-Name: Dan Zhang Author-X-Name-First: Dan Author-X-Name-Last: Zhang Author-Name: Arash Farnoosh Author-X-Name-First: Arash Author-X-Name-Last: Farnoosh Author-Name: Zhengwei Ma Author-X-Name-First: Zhengwei Author-X-Name-Last: Ma Title: Does the Launch of Shanghai Crude Oil Futures Stabilize the Spot Market? A Financial Cycle Perspective Abstract: Based on the examination of price discovery between Shanghai crude oil futures and the spot market, this paper explores whether the introduction of Shanghai crude oil futures can play a stabilizing role in the spot market, alleviating the impact of the financial cycle risk on the crude oil market from March 2018 to December 2019. The results show that there is only a uni-directional relationship of the spot price to futures price, and spot plays a leading role in price discovery. The risk of the financial cycle will increase the volatility of spot price, and the introduction of crude oil futures market can increase the impact of the financial cycle on the spot market. The additional research on the microcosmic mechanism of Shanghai crude oil futures indicates that crude oil futures market mainly influences the spot market fluctuation through the behaviour of traders: speculation increases price volatility in the spot market, which is more pronounced in the high volatility of the financial cycle as oppose to hedging transaction. Journal: International Economic Journal Pages: 39-58 Issue: 1 Volume: 36 Year: 2022 Month: 01 X-DOI: 10.1080/10168737.2021.2001027 File-URL: http://hdl.handle.net/10.1080/10168737.2021.2001027 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:1:p:39-58 Template-Type: ReDIF-Article 1.0 Author-Name: Minsoo Jeong Author-X-Name-First: Minsoo Author-X-Name-Last: Jeong Author-Name: Chang Sik Kim Author-X-Name-First: Chang Sik Author-X-Name-Last: Kim Author-Name: Haeseong Park Author-X-Name-First: Haeseong Author-X-Name-Last: Park Title: Re-examining The Time-varying Relationship Between Health and Income Distributions Abstract: In this paper, we address the issue of the time-varying relationship between health and long-term income and show that income profile over time is more important than the permanent income of a specific period in explaining general health condition. A functional probit regression model is introduced to investigate how the income profiles of middle-aged people can affect the health condition of the last period of the given period using the Panel Study of Income Dynamics data. We also perform the probit estimation to check the robustness of the functional regression results. The empirical results of our paper clearly indicate a time-varying relationship between the entire distribution of income and health status at one point in time, which cannot be accurately explained by the current income or permanent income of the given period. Journal: International Economic Journal Pages: 158-170 Issue: 2 Volume: 36 Year: 2022 Month: 04 X-DOI: 10.1080/10168737.2022.2073601 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2073601 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:2:p:158-170 Template-Type: ReDIF-Article 1.0 Author-Name: Yilin Li Author-X-Name-First: Yilin Author-X-Name-Last: Li Author-Name: Jingbu Wang Author-X-Name-First: Jingbu Author-X-Name-Last: Wang Author-Name: Keunyeob Oh Author-X-Name-First: Keunyeob Author-X-Name-Last: Oh Title: Effects of Globalization on the Convergence of Poverty Levels among Asian Countries Abstract: This study empirically analyzed the effects of economic globalization on differences in poverty levels among Asian countries using data for a 25-year period, as well as the effects of economic globalization on the process. Trade openness (TO) and foreign direct investment (FDI) data were used as proxy variables for globalization. Using a headcount ratio (HCR) and per capita gross domestic product (PGDP), we analyzed the convergence of poverty levels using the σ- and β-convergence concepts. It was found that poverty levels have been substantially reduced in Asia and that economic globalization assisted in this change. The PGDP gaps among countries have gradually decreased and trade openness and FDI have had a strong effect on poverty reduction. Finally, there was no evidence for convergence in terms of the HCR during the recent globalization period and, therefore, it was concluded that economic globalization has not assisted in the convergence of HCR, while it helped the convergence of PGDP. This implies that the poverty issue is different from the income level issue. Thus, care must be taken to consider policy beyond the simple approach of economic growth. Journal: International Economic Journal Pages: 193-205 Issue: 2 Volume: 36 Year: 2022 Month: 04 X-DOI: 10.1080/10168737.2022.2052742 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2052742 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:2:p:193-205 Template-Type: ReDIF-Article 1.0 Author-Name: Hakan Yilmazkuday Author-X-Name-First: Hakan Author-X-Name-Last: Yilmazkuday Title: Protectionism, Competitiveness and Inequality: Cross-Country Evidence from Soccer Abstract: Using club-level data on domestic-league and international points from 73 countries, this paper achieves a policy evaluation of country-specific regulations regarding soccer success. The results show that restrictions on foreign direct investment reduce the international competitiveness of clubs, whereas restrictions on international migration policies have no significant impact on it. Domestic inequality across clubs increases with restrictions on a minimum number of home-grown players, while it goes down with restrictions on foreign direct investment or restrictions on a maximum number of foreign players. The results are robust to the consideration of other domestic regulations, market value of clubs or number of matches played. Journal: International Economic Journal Pages: 171-192 Issue: 2 Volume: 36 Year: 2022 Month: 04 X-DOI: 10.1080/10168737.2022.2062613 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2062613 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:2:p:171-192 Template-Type: ReDIF-Article 1.0 Author-Name: Joohee Kim Author-X-Name-First: Joohee Author-X-Name-Last: Kim Author-Name: Soohyung Lee Author-X-Name-First: Soohyung Author-X-Name-Last: Lee Title: Foreign Direct Investment and Housing Prices: Evidence from South Korea Abstract: This paper examines the extent to which Chinese Foreign Direct Investment affect housing prices in South Korea. To identify the effect, we build an econometric model based on the assumption that the amount of housing investments made by the Chinese correlate with the amount of FDI from China to Korea and the share of Chinese residents in a given location. By analyzing housing transaction data, we find that the Chinese FDI accounts for 15.3% of the increase in housing prices between 2011 and 2016. The positive effect of Chinese FDI is particularly pronounced in Seoul and its surroundings, as well as Daegu. Journal: International Economic Journal Pages: 247-262 Issue: 2 Volume: 36 Year: 2022 Month: 04 X-DOI: 10.1080/10168737.2022.2055108 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2055108 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:2:p:247-262 Template-Type: ReDIF-Article 1.0 Author-Name: Michael Gove Author-X-Name-First: Michael Author-X-Name-Last: Gove Author-Name: Liliana Meza González Author-X-Name-First: Liliana Author-X-Name-Last: Meza González Title: The Effect of Mexican Emigration to the US on Trade and Inward FDI in Mexico* Abstract: Using a panel data set of the 32 Mexican states and the 10 years from 2008 and 2017, this paper estimates the potential contribution of migration to international trade and foreign direct investment (FDI). In the context of Mexico and the United States, we estimate models with a generalized propensity scores (GPS) methodology in order to account for the endogeneity of the migration decision, in addition to baseline gravity models. We find a generally positive and significant relationship between Mexico-US migration and Mexico-US imports, exports, and inward FDI from the US to Mexico. While mixed evidence is found across the various gravity estimations regarding the relationship between Mexico-US migration and inward FDI from the US to Mexico, the GPS results signal consistency across various estimations. Even when controlling for size of the state population, size of the state economy, distance from the capital city of each state to the Mexico-US border, and the fact that a state is on the Mexico-US border, basic results remain consistent. We conclude that in this context migration complements trade and inward FDI, and point to transnationalism as a central factor that leads to migration’s positive contribution. Journal: International Economic Journal Pages: 229-246 Issue: 2 Volume: 36 Year: 2022 Month: 04 X-DOI: 10.1080/10168737.2022.2055107 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2055107 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:2:p:229-246 Template-Type: ReDIF-Article 1.0 Author-Name: Yongseung Jung Author-X-Name-First: Yongseung Author-X-Name-Last: Jung Title: Reevaluating the Role of Cost-Push and Technology Shocks in a Sticky Price Model Abstract: This paper sets up a nominal price rigidity model with catching up with the Joneses to address the relative importance of technology, cost-push, and monetary policy shocks in driving business cycles. This paper shows that the technology shock is the most important source of the post-war U.S. output and inflation variations, and the cost-push shock plays a moderate role in output variations in the model with habit. This finding contrasts with Ireland's results, wherein the cost-push shock explains 80% of output variations in the long run in the sticky price model without habit in consumption. Journal: International Economic Journal Pages: 147-157 Issue: 2 Volume: 36 Year: 2022 Month: 04 X-DOI: 10.1080/10168737.2022.2052743 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2052743 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:2:p:147-157 Template-Type: ReDIF-Article 1.0 Author-Name: Joo Yeon Sun Author-X-Name-First: Joo Yeon Author-X-Name-Last: Sun Title: Competition and Entry Deterrence in the International Flight Market: Evidence from Korean Regional Airport Abstract: This study examines carriers’ entry of the Korean international routes at Daegu International Airport from 2010 to 2018. We investigate whether carriers’ entry into the international flight market is deterred by pre-existing carriers. The competition level of the six months before entry has a much higher contribution to the decision to launch route service. The lower the market concentration six months ago, the less likely a new carrier entry in the current period; competitive and increasingly crowded routes are hindered by entry barriers, deterring new entrants to the international flight market. The shorter the flight distance and the larger the air passenger market, the higher the probability of entering a new airline carrier. New entrants to non-stop point-to-point route structures are more likely on short-haul routes and routes operated by at least one low-cost carrier. Journal: International Economic Journal Pages: 263-274 Issue: 2 Volume: 36 Year: 2022 Month: 04 X-DOI: 10.1080/10168737.2022.2073600 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2073600 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:2:p:263-274 Template-Type: ReDIF-Article 1.0 Author-Name: Giscard Assoumou-Ella Author-X-Name-First: Giscard Author-X-Name-Last: Assoumou-Ella Author-Name: Cécile Bastidon Author-X-Name-First: Cécile Author-X-Name-Last: Bastidon Author-Name: Bastien Bonijoly Author-X-Name-First: Bastien Author-X-Name-Last: Bonijoly Title: Change is Inevitable, Progress is Optional: Impact of FED Tapering Announcements on North African Equity Markets Abstract: We propose one of the first empirical evaluations of the transmission of the 2013–2015 Federal reserve Tapering announcements of assets purchases, to the stock markets of the three north African countries with the most advanced financial development: Egypt, Morocco, and Tunisia. We use two alternative announcement effects dummy variables: one constructed from econometric tests of individual announcements, the other constructed from the media coverage. In spite of a relatively low level of financial integration, the results of panel data tests show a significant negative impact of announcements, generally associated with the Federal Open Market Committee (FOMC) meetings rather than minutes. This result is in line with the literature on the domestic and international announcement effects of the information released by the FOMC, in the absence of discordance of tone between the meeting statement and the minutes. From the perspective of policy recommendations, the study of the interaction of Tapering announcements with domestic fundamentals shows interesting results. Fundamentals with favorable direct effects on equity markets dynamics could indirectly increase their vulnerability to announcement effects. Inflation, domestic investment and commercial openness show significant interaction effects in the opposite sense of their direct effects, some of which are superior to the direct effects. Journal: International Economic Journal Pages: 206-228 Issue: 2 Volume: 36 Year: 2022 Month: 04 X-DOI: 10.1080/10168737.2022.2052741 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2052741 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:2:p:206-228 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2114098_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Soosung Hwang Author-X-Name-First: Soosung Author-X-Name-Last: Hwang Author-Name: Eunji Lee Author-X-Name-First: Eunji Author-X-Name-Last: Lee Title: The Effects of Sentiment on Extreme Movements in Exchange Rates Abstract: We investigate details of the effects of sentiment on dollar exchange rates in six countries, in particular, during periods of extreme movements. Using the Generalized Sup Augmented Dickey-Fuller (GSADF) test, we first show evidence that there are periods of explosive patterns in the exchange rates during the sample period from January 2000 to December 2020. We then examine how sentiment affects the exchange rates during the periods of the extreme movements. Our results show that sentiment has significant effects on exchange rates only when the exchange rates decrease in extreme ways, i.e. the currencies appreciate sharply against the USD. Moreover, these sharp appreciations occur when sentiment in the six countries is more optimistic than that in the US. Therefore, our study shows that currency values appreciate by sentiment and this happens rapidly over a short period. Journal: International Economic Journal Pages: 445-460 Issue: 3 Volume: 36 Year: 2022 Month: 07 X-DOI: 10.1080/10168737.2022.2114098 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2114098 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:3:p:445-460 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2098353_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Helena Glebocki Keefe Author-X-Name-First: Helena Author-X-Name-Last: Glebocki Keefe Author-Name: Sujata Saha Author-X-Name-First: Sujata Author-X-Name-Last: Saha Title: Foreign Exchange and Global Monetary Shocks: The Asymmetric Effects of Advanced Economies’ Quantitative Easing on Exchange Rate Volatility in Emerging Markets Abstract: This research assesses the impact of global monetary shocks stemming from quantitative easing policies in advanced economies on exchange rate volatility in emerging markets. Using panel ARDL (Autoregressive Distributed Lag) model, an asymmetric effect is detected showing that increases in quantitative easing have a significant impact on exchange rate volatility, whereas subsequent tapering does not. Moreover, the Fragile Five economies experience spikes in exchange rate volatility that are more than double what is detected in other emerging markets. Finally, the impact of foreign exchange intervention to offset the effect on volatility is significant across emerging markets and is, once again, larger in the Fragile Five economies. The results are supported using panel VAR (Vector Autoregression) estimations. Journal: International Economic Journal Pages: 339-361 Issue: 3 Volume: 36 Year: 2022 Month: 07 X-DOI: 10.1080/10168737.2022.2098353 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2098353 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:3:p:339-361 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2067888_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Marco Ortiz Author-X-Name-First: Marco Author-X-Name-Last: Ortiz Author-Name: Gerardo Herrera Author-X-Name-First: Gerardo Author-X-Name-Last: Herrera Title: Optimal Monetary Policy under Balance-Sheet Effects on the Non-tradable Sector in a Small Open Economy Abstract: The choice of an exchange rate regime is crucial in small open economies (SOEs) with a dollarized financial sector. While the traditional Mundell–Fleming model supports a floating exchange rate, evidence shows that central banks frequently intervene in exchange markets. One of the reasons for these interventions is the consequences of large depreciations that could trigger negative balance-sheet effects. This paper extends the literature about the optimal monetary policy in SOEs, by considering a heterogeneous hedge across tradable and non-tradable sectors. Our findings support a ‘leaning against the wind’ policy as an optimal response to negative external shocks. This result is present even if only one sector of the economy faces credit constraints. We show that the vulnerability of the economy to large negative external shocks depends not only on the overall leverage, but also on the distribution of foreign currency debt across economic sectors. Journal: International Economic Journal Pages: 275-306 Issue: 3 Volume: 36 Year: 2022 Month: 07 X-DOI: 10.1080/10168737.2022.2067888 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2067888 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:3:p:275-306 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2083653_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Isaac Appiah-Otoo Author-X-Name-First: Isaac Author-X-Name-Last: Appiah-Otoo Author-Name: Alex O. Acheampong Author-X-Name-First: Alex O. Author-X-Name-Last: Acheampong Author-Name: Na Song Author-X-Name-First: Na Author-X-Name-Last: Song Author-Name: Camara Kwasi Obeng Author-X-Name-First: Camara Kwasi Author-X-Name-Last: Obeng Author-Name: Isaac K. Appiah Author-X-Name-First: Isaac K. Author-X-Name-Last: Appiah Title: Foreign aid—Economic Growth Nexus in Africa: Does Financial Development Matter? Abstract: This study explored the role of financial development in foreign aid (measured by agriculture, humanitarian, health, economic infrastructure and services, and education aid) and economic growth relationship for 37 African countries spanning the 2002–2018 period. Using the instrumental variable generalized method of moments model, our findings indicated that while foreign aid impedes Africa’s growth, financial development spurs economic growth. The conditional effect analysis showed that financial development conditions foreign aid to spur economic growth. The country-specific analysis further showed that foreign aid has a higher growth elasticity in countries with relatively better financial systems, such as Mauritius, South Africa, Gabon, Tunisia, and Botswana, whilst the growth elasticity of aid is smaller in countries with a relatively weak financial system such as Malawi, Guinea Bissau, Sierra Leone, and the Democratic Republic of Congo. The study recommended the need for policymakers in Africa to implement innovative ways to improve domestic revenue mobilization. The study also recommended that policymakers in Africa should create an enabling environment that will enhance the development of Africa’s financial system to mitigate the adverse effect of aid on economic growth. Journal: International Economic Journal Pages: 418-444 Issue: 3 Volume: 36 Year: 2022 Month: 07 X-DOI: 10.1080/10168737.2022.2083653 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2083653 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:3:p:418-444 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2090593_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: In Kyung Kim Author-X-Name-First: In Kyung Author-X-Name-Last: Kim Author-Name: Kyoo il Kim Author-X-Name-First: Kyoo il Author-X-Name-Last: Kim Title: Voting in a Pandemic: Lessons From the 2020 South Korean Legislative Election Abstract: In this paper, we examine the extent to which a government's response to a pandemic affects election outcomes. Using detailed data on South Korea's 21st legislative election, held in April 2020 during the COVID-19 pandemic, we find that a candidate of the ruling Democratic Party was less preferred in electoral districts where the COVID-19 infection rate was higher. We also find that the South Korean government's successful control of the disease contributed significantly to the overwhelming victory of the ruling party against the leading opposition party. Specifically, our counterfactual analysis predicts that each party would have taken 129 and 102 of the 231 constituency seats considered in the analysis, respectively, had the COVID infection rate been the same as the OECD average during the election period. Given that the observed result was 147 to 84, this implies that 18 electees of the ruling party would have lost to the candidates of the leading opposition party, which in turn would have granted the opposition party the ability to block any attempt by the ruling party to fast-track debatable bills. Journal: International Economic Journal Pages: 362-381 Issue: 3 Volume: 36 Year: 2022 Month: 07 X-DOI: 10.1080/10168737.2022.2090593 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2090593 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:3:p:362-381 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2100447_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Hongkee Kim Author-X-Name-First: Hongkee Author-X-Name-Last: Kim Author-Name: Eui-hwan Park Author-X-Name-First: Eui-hwan Author-X-Name-Last: Park Author-Name: Gyeahyung Jeon Author-X-Name-First: Gyeahyung Author-X-Name-Last: Jeon Title: The Optimal Leverage Ratio of Credit Guarantee Institution: Case of Local Credit Guarantee Foundation in South Korea* Abstract: This study aims to estimate the optimal leverage ratio of the Local Credit Guarantee Foundation (hereafter LCGF), which plays an important role in financing small and micro businesses in South Korea. The optimal leverage ratio refers to the rate of credit guarantee balance to capital at which the guarantee system can be soundly and stably operated while meeting the credit guarantee demand. The optimal leverage ratio of LCGF is derived using three methods: a sustainable budget constraint-based leverage ratio, an institutional objective maximizing leverage ratio, and a BIS ratio-based leverage ratio.Assuming that the average trend of the past ten years is maintained, the sustainable leverage ratio is evaluated to be 7.55. In addition, the institutional objective maximizing leverage ratio is estimated to be 7.24. When the optimal BIS ratio increases from 11.5% to 14%, the BIS ratio-based leverage ratio is evaluated to be between 8.39 and 10.21. The leverage ratio at the end of 2020, which was 9.16, is appropriate when using the BIS ratio, considering the COVID-19 crisis. However, it is judged to be slightly higher than the sustainable leverage ratio or the institutional objective maximizing leverage ratio. Journal: International Economic Journal Pages: 402-417 Issue: 3 Volume: 36 Year: 2022 Month: 07 X-DOI: 10.1080/10168737.2022.2100447 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2100447 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:3:p:402-417 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2105378_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Cephas Naanwaab Author-X-Name-First: Cephas Author-X-Name-Last: Naanwaab Title: The Impact of Trade Liberalization on Income Inequality: Does the Direction of Trade Matter? Abstract: Recent trends in inequality have raised concerns among researchers and policymakers globally. The role of globalization, one of the leading forces driving this trend, continues to be intensely debated in academic and policy circles. Invoking standard trade theory, this paper analyses whether and the extent to which trade liberalization has contributed to the recent trends in inequality. The approach and findings of the paper are novel: previous studies of trade liberalization’s impact on inequality do not explicitly control the direction of trade. The empirical results show that trade liberalization is associated with decreasing income inequality overall, but contingent on the direction of trade, it has opposing effects: North–North and South–South trade are inequality-reducing while North–South trade is inequality-increasing. Simply put, liberalizing trade between countries of similar developmental levels does not raise inequality. This paper affirms, using recent data, that trade with developing countries raises inequality in developed countries. Additionally, it finds that North–South trade (particularly imports from high-income to low-income countries) may also raise inequality in developing countries, contrary to Heckscher–Ohlin–Stolper–Samuelson model predictions. Skill-biased technical change, a consequence of trade liberalization between North and South, is the main mechanism driving inequality increases in developing countries. Journal: International Economic Journal Pages: 307-338 Issue: 3 Volume: 36 Year: 2022 Month: 07 X-DOI: 10.1080/10168737.2022.2105378 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2105378 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:3:p:307-338 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2091634_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Kotbee Shin Author-X-Name-First: Kotbee Author-X-Name-Last: Shin Author-Name: Bo-Young Choi Author-X-Name-First: Bo-Young Author-X-Name-Last: Choi Title: The Impact of Chinese Economic Structural Changes on Korea’s Exports to China* Abstract: We examine the structural changes of the Chinese economy and analyse how those changes have affected Korea’s exports to China. Focusing on the evolution of Chinese development strategy and the changing role of China in global value chain during 2000s, we separate the role of Chinese external demand and domestic demand in Korea’s exports to China. We also shed light on the driving force among Chinese GDP expenditure components in Korea’s exports to China for different periods of time. The subsample analysis shows that Chinese external demand had a significant impact on Korea’s exports to China before 2008, while Chinese domestic demand became important afterwards. More specifically, we find that Chinese investment is the most dominant expenditure component in determining Korea’s exports to China in recent times. Journal: International Economic Journal Pages: 382-401 Issue: 3 Volume: 36 Year: 2022 Month: 07 X-DOI: 10.1080/10168737.2022.2091634 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2091634 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:3:p:382-401 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2142644_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Seung-Leul Kim Author-X-Name-First: Seung-Leul Author-X-Name-Last: Kim Author-Name: Sang-Ho Lee Author-X-Name-First: Sang-Ho Author-X-Name-Last: Lee Title: Foreign Eco-Technology Licensing Strategy and the Coordination of Import Tariff and Emission Tax Policies Abstract: This study investigates eco-technology licensing strategy by a foreign firm that offers two-part tariff licensing contracts (i.e. combination of a per unit royalty and a lump-sum fee) to a domestic polluting firm under the strategic import tariff in the presence of an exogeneous emission tax. We particularly consider the possibility of negative royalty (or subsidised royalty per unit production) by the foreign licensor and compare the two different licensing cases with and without non-negative royalty. We find that given a lower level of emission tax, the licensor may choose negative royalty only when the import tariff is high. We also find that the optimal import tariff with non-restrictive licensing contract with a negative royalty is higher than that with restrictive one, but allowing a negative royalty is better for domestic welfare unless the emission tax is so high (or environmental damage is serious). Finally, we show find that the optimal import tariff under the two-part tariff licensing might have a negative relationship with an emissions tax. Journal: International Economic Journal Pages: 510-529 Issue: 4 Volume: 36 Year: 2022 Month: 10 X-DOI: 10.1080/10168737.2022.2142644 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2142644 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:4:p:510-529 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2100448_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Chokri Zehri Author-X-Name-First: Chokri Author-X-Name-Last: Zehri Title: The Time-Varying Effects of Policies: Evidence from Capital Flows to Emerging Markets Abstract: We use a novel approach—instrumental variable quantile regression estimates—to analyze expected portfolio inflows to emerging economies. We consider country-specific conditions and the effectiveness of policy interventions when economies are faced with an adverse international financial shock. This approach allows differentiation between the short- and medium-term impacts. Our results suggest that macroprudential policies and foreign exchange actions may reduce the risks of large capital flow movements following an adverse international shock; however, capital flow management policies such as capital control stringency seem to be ineffective. Besides, there is little evidence that monetary policy and high quality of institutions can immediately protect emerging markets from the risks of international financial shocks. However, institutional quality may effectively dampen the impact of excessive flows in the medium term. These findings emphasize the limitations of previous studies, which focused merely on the short-term horizon. Journal: International Economic Journal Pages: 569-595 Issue: 4 Volume: 36 Year: 2022 Month: 10 X-DOI: 10.1080/10168737.2022.2100448 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2100448 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:4:p:569-595 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2143545_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Jung Hur Author-X-Name-First: Jung Author-X-Name-Last: Hur Author-Name: Jin Young Yoon Author-X-Name-First: Jin Young Author-X-Name-Last: Yoon Title: Multinational Factoryless Goods Producers and Expansion of the Wholesale & Retail Industry in Korea Abstract: This paper studies the role of Multinational Factoryless Goods Producers (MFGPs) in the recent expansion of the wholesale and retail industries in Korea. We empirically investigate the impacts of the industry-level store entry rate of the MFGPs on labor productivity growth and store-entry and exit probabilities of Non-MFGPs which are the majority of firms in the industries. Our main results are as follows. First, the industry-level store entry rates of MFGPs are positively associated with increases in labor productivity growth of Non-MFGPs. Second, the industry-level store entry rates of MFGPs are positively related to the store-entry decision of Non-MFGPs. These findings may imply that the entries of MFGP stores contribute to the growth and expansion of the wholesale and retail industries as a whole. Journal: International Economic Journal Pages: 461-476 Issue: 4 Volume: 36 Year: 2022 Month: 10 X-DOI: 10.1080/10168737.2022.2143545 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2143545 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:4:p:461-476 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2142645_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Jan R. Kim Author-X-Name-First: Jan R. Author-X-Name-Last: Kim Author-Name: Sungjin Cho Author-X-Name-First: Sungjin Author-X-Name-Last: Cho Title: Developing a Regime-Switching Present Value Model: Switching Fundamentals and Bubbles Abstract: We develop a present-value model where the fundamental and non-fundamental components switch between distinct regimes. The non-fundamental component is specified as a periodically collapsing bubble of Balke and Wohar [Balke, N. S., & Wohar, M. E. (2009). Market fundamentals versus rational bubbles in stock prices: A Bayesian perspective. Journal of Applied Econometrics, 24(1), 35–75. https://doi.org/10.1002/jae.1025]. The fundamental component is constructed as in van Binsbergen and Koijen [van Binsbergen, J. H., & Koijen, R. S. J. (2010). Predictive regressions: A present-value approach. The Journal of Finance, 65(4), 1439–1471. https://doi.org/10.1111/j.1540-6261.2010.01575.x], by treating the expectations of market fundamentals as latent variables. Unlike existing methods, e.g. [Zhu, X. (2015). Tug-of-war: Time-varying predictability of stock returns and dividend growth. Review of Finance, 19(6), 2317–2358. https://doi.org/10.1093/rof/rfu047; Choi, K. H., Kim, C., & Park, C. (2017). Regime shifts in price-dividend ratios and expected stock returns: A present-value approach. Journal of Money, Credit and Banking, 49(2–3), 417–441. https://doi.org/10.1111/jmcb.12384; Chan, J. C., & Santi, C. (2021). Speculative bubbles in present-value models: A Bayesian Markov-switching state space approach. Journal of Economic Dynamics and Control, 127, 1–26], ours requires no unnecessary approximations, accommodates flexible forms of regime-switching, and the resulting present-value formula is internally consistent. Journal: International Economic Journal Pages: 477-490 Issue: 4 Volume: 36 Year: 2022 Month: 10 X-DOI: 10.1080/10168737.2022.2142645 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2142645 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:4:p:477-490 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2144926_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Jungwon Yeo Author-X-Name-First: Jungwon Author-X-Name-Last: Yeo Title: The Rise of Niche Consumption: A Shopping Basket Similarity Approach Abstract: The rise of e-commerce and globalization has led to a surge in product variety. As a result, consumers are now able to purchase products that meet their specific needs and wants. A rise of such niche consumption may be evidenced by a long-tailed market share distribution, or falling aggregate spending concentration accompanied by rising consumer spending concentration. In this paper, I propose a more direct method to uncover whether consumers become similar or different in the products they spend more on. Using Nielsen's consumer panel data, I compute cosine similarity scores for each pair of household shopping baskets represented by the expenditure share distributions. I find the households' grocery baskets became increasingly different from one another from 2005 to 2019 regardless of whether products are defined narrowly or broadly. But, when products are broadly defined as brands, the aggregate and individual consumer spending concentration both rise from 2015 and on. This shows the consumer shopping basket similarity approach can unveil patterns of niche consumption even when consumer and aggregate spending concentration move in the same direction. Journal: International Economic Journal Pages: 491-509 Issue: 4 Volume: 36 Year: 2022 Month: 10 X-DOI: 10.1080/10168737.2022.2144926 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2144926 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:4:p:491-509 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2144925_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Jaehyun Suh Author-X-Name-First: Jaehyun Author-X-Name-Last: Suh Title: Effect of Capital Controls: A Quantile Regression Approach Abstract: A neoclassical model reveals that capital controls depress capital flows by adjusting the marginal benefits and costs of additional asset purchases. According to this view, their effectiveness might be dependent on the volume of flows. To study this possibility, we examined the associations between capital flows and controls using the Powell’s (2022) quantile regression methodology. The data used cover 43 emerging market economies between 1995 and 2019. Our results suggest that capital controls are differently associated with capital flows depending on the conditional distributions of capital flows and this implies capital controls could be effective but only when implemented appropriately depending on the volume of inward and outward capital flows. Therefore, the government must carefully and precisely set restrictions depending on the volume of capital flows, which might be an extremely challenging task. Journal: International Economic Journal Pages: 530-555 Issue: 4 Volume: 36 Year: 2022 Month: 10 X-DOI: 10.1080/10168737.2022.2144925 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2144925 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:4:p:530-555 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2142643_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20220907T060133 git hash: 85d61bd949 Author-Name: Thi Thanh Mai Le Author-X-Name-First: Thi Thanh Mai Author-X-Name-Last: Le Author-Name: Le Duc Niem Author-X-Name-First: Le Duc Author-X-Name-Last: Niem Author-Name: Taegi Kim Author-X-Name-First: Taegi Author-X-Name-Last: Kim Title: Economic Complexity and Economic Development in ASEAN Countries Abstract: This paper investigates the changes in export quality among ASEAN countries over time by using the economic complexity index. Specifically, we used HS 6-digit detailed trade data for 197 countries over the period from 2000-2017. The results show that the economic complexity of most ASEAN countries, except for Cambodia, Laos, and Indonesia, has improved. The export baskets of ASEAN countries are shifting from low complexity products to medium and high complexity products. We also evaluate the export quality of countries using weighted product complexity, which shows that the export quality of ASEAN countries has improved. The regression results show that economic complexity has positive effects on economic growth, and they also show that infrastructure, education level, trade openness, and financial openness contribute to the development of countries. However, the impact extent of economic complexity varies among different ASEAN countries; for example, its impact is weaker in Singapore, Thailand, and Malaysia but stronger in Vietnam, Cambodia, and the Philippines. Journal: International Economic Journal Pages: 556-568 Issue: 4 Volume: 36 Year: 2022 Month: 10 X-DOI: 10.1080/10168737.2022.2142643 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2142643 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:36:y:2022:i:4:p:556-568 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2169868_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Wisarut Suwanprasert Author-X-Name-First: Wisarut Author-X-Name-Last: Suwanprasert Title: An Inconvenient Truth: Welfare Losses From Asymmetric Reductions in Transportation Costs Abstract: Recent empirical studies find that the magnitudes of reductions in bilateral shipping costs are asymmetric within country pairs. Motivated by these findings, I study the welfare effects of asymmetric reductions in transportation costs in Helpman and Itskhoki's [(2010). Labour market rigidities, trade and unemployment. Review of Economic Studies, 77(3), 1100–1137] model of international trade with heterogeneous firms and frictional labor markets. I show that sufficiently asymmetric reductions in bilateral transportation costs result in welfare losses in the importing country, while a uniform reduction in the bilateral transportation costs of both imports and exports always benefits both countries. This paper raises a cautionary note that the phrase ‘welfare gains from trade liberalization’ implicitly assumes an ‘approximately equal’ reduction in transportation costs. Journal: International Economic Journal Pages: 71-81 Issue: 1 Volume: 37 Year: 2023 Month: 01 X-DOI: 10.1080/10168737.2023.2169868 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2169868 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:1:p:71-81 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2153900_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Jinyong Kim Author-X-Name-First: Jinyong Author-X-Name-Last: Kim Title: Simultaneous Inference on the Korean Won-US Dollar Forward Premium Anomaly Abstract: The forward premium anomaly, which refers to the empirical failure of the uncovered interest parity (UIP), has been primarily examined by the forward premium regression of [Fama, E. (1984). Forward and spot exchange rates. Journal of Monetary Economics, 14(3), 319–338. https://doi.org/10.1016/0304-3932(84)90046-1]. Some studies apply the rolling-window regression to capture the time-varying coefficient on the forward premium, with difficulty in statistically testing the deviation of the coefficient from the UIP over time. We follow [Baillie, R., & Kim, K. (2015). Was it risk? Or was it fundamentals? Explaining excess currency returns with kernel smoothed regressions. Journal of Empirical Finance, 34, 99–111] to apply the simultaneous inference procedure to the Korean Won-US Dollar spot and forward exchange rates by estimating the time-varying coefficient from the kernel-smoothed local-linear regression and constructing the uniform confidence band to test the local deviation. We find that, while the UIP is not rejected from the baseline regression, the simultaneous inference shows that the deviation from the UIP is mainly observed during the early 2000s and 2010s. Time-variation of the forward premium coefficient tends to be significantly affected by economic uncertainties such as the interest rate, inflation, and stock return volatilities in Korea and US. Journal: International Economic Journal Pages: 82-92 Issue: 1 Volume: 37 Year: 2023 Month: 01 X-DOI: 10.1080/10168737.2022.2153900 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2153900 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:1:p:82-92 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2153901_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Edward Kutsoati Author-X-Name-First: Edward Author-X-Name-Last: Kutsoati Author-Name: Sharun W. Mukand Author-X-Name-First: Sharun W. Author-X-Name-Last: Mukand Title: Expectations and the Central Banker: Making Decisions the Market Expects to See? Abstract: This paper develops a simple model to examine conditions under which a monetary policy-making authority is tempted to ‘follow the market’. In doing so, we explore the implications of increased market consensus on the practice of monetary policy and show that inefficiency in policymaking is most likely precisely when there is a very high consensus that economic fundamentals are weak or strong. In addition, our results also shed light on (i) why interest rates may not be high enough even when the central bank's information suggests a rise in asset prices may be due to a ‘bubble’ shock; (ii) why a central banker may be reluctant to adopt a loose monetary policy even when investors seem to be very pessimistic about the path of future output; and (iii) why, contrary to conventional models, we sometimes observe an upward revision of private sector‘s forecasts of inflation when the central bank tightens its monetary policy. The results have implications for the transparency of monetary policy. Journal: International Economic Journal Pages: 17-38 Issue: 1 Volume: 37 Year: 2023 Month: 01 X-DOI: 10.1080/10168737.2022.2153901 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2153901 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:1:p:17-38 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2170443_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Erlan Konebayev Author-X-Name-First: Erlan Author-X-Name-Last: Konebayev Title: Forecasting a Commodity-Exporting Small Open Developing Economy Using DSGE and DSGE-BVAR Abstract: In this paper, we assess the forecasting performance of three types of structural models – DSGE, BVAR with Minnesota priors, and DSGE-BVAR – in the context of a commodity-exporting small open developing economy using the data for Kazakhstan. We find that BVAR and DSGE-BVAR models generally produce point forecasts that are more accurate and less biased compared to those of DSGE in the short term, but that BVAR forecasts rapidly deteriorate in quality as the length of the forecast horizon increases. The density forecast analysis shows that when all variables are jointly considered, the models have similar prediction accuracy, and when financial sector variables are omitted, the BVAR and DSGE-BVAR models demonstrate superior performance in the short term. Journal: International Economic Journal Pages: 39-70 Issue: 1 Volume: 37 Year: 2023 Month: 01 X-DOI: 10.1080/10168737.2023.2170443 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2170443 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:1:p:39-70 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2169738_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Minjung Park Author-X-Name-First: Minjung Author-X-Name-Last: Park Author-Name: Jungwon Yeo Author-X-Name-First: Jungwon Author-X-Name-Last: Yeo Title: Intra-Household Peer Effects in Smartphone Adoption Abstract: This paper examines intra-household peer effects in the adoption of smartphones using unique South Korean panel data. Consistent estimation of peer effects in this setting needs to address two key challenges: homophily and endogenous sample attrition. We address both challenges and obtain consistent estimates of peer effects, by first-differencing the individual-level panel data and then using longer differences of the independent variables as instruments. The estimation results show that an individual becomes much more likely to adopt a smartphone if other household members have previously adopted one. The analysis also reveals that failure to account for endogenous attrition of individuals after product adoption would lead to a significant under-estimation of peer effects. Journal: International Economic Journal Pages: 1-16 Issue: 1 Volume: 37 Year: 2023 Month: 01 X-DOI: 10.1080/10168737.2023.2169738 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2169738 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:1:p:1-16 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2153899_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Mohsen Bahmani-Oskooee Author-X-Name-First: Mohsen Author-X-Name-Last: Bahmani-Oskooee Author-Name: Jungho Baek Author-X-Name-First: Jungho Author-X-Name-Last: Baek Title: Korean Trade in 10 Service Industries and Role of the Won? An Asymmetric Analysis Abstract: International trade includes trade not just in goods but also in services. Introduction of internet technology has helped to boost trade in services by more than trade in goods. What has been the role of the exchange rate in this journey? While many studies have investigated the link between the exchange rate and trade in goods, only three studies in the literature have assessed the impact of exchange rate changes on trade in services. Two have used data from the U.S., and one from China. We add to this new emerging literature by assessing the symmetric and asymmetric effects of changes in the real effective exchange rate of the Korean won on Korean trade in 10 service categories with the rest of the world. Considering the symmetric (linear) models and asymmetric (nonlinear) models to be complementary, we find short-run effects of imports and exports of almost all 10 service industries. Short-run effects translate into the long run in little over 50% of industries. These findings did not change significantly when we considered real trade in services versus nominal trade. Our findings were industry-specific. Journal: International Economic Journal Pages: 93-119 Issue: 1 Volume: 37 Year: 2023 Month: 01 X-DOI: 10.1080/10168737.2022.2153899 File-URL: http://hdl.handle.net/10.1080/10168737.2022.2153899 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:1:p:93-119 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2176903_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Yun Bai Author-X-Name-First: Yun Author-X-Name-Last: Bai Author-Name: Keunyeob Oh Author-X-Name-First: Keunyeob Author-X-Name-Last: Oh Title: A Study of the Effects of China’s TBT Notifications on Korean Exports Abstract: Since China joined the World Trade Organization (WTO) in 2002, the number of technical barriers to trade (TBT) notifications has increased rapidly. This study investigates the impact of China’s imposition of TBTs on the exports of Korean manufacturing-industry from 2002 to 2014. We focus on the following aspects: exports in terms of value-added, a comparison of exports of final goods with exports of intermediate goods, and specific trade concerns (STCs). Our findings are as follows. First, China’s TBTs have an insignificant impact on Korean manufacturing exports to China when we investigate the whole manufacturing industry sector. Second, as a result of analyzing final goods and intermediate goods separately, we do not find a significant effect of TBTs on the export of intermediate goods, whereas they have negative effects on the export of final goods. This is in line with our expectations that China does not want to restrict the import of intermediate goods. Third, further analysis of the relationship between exports and TBT STCs is conducted. However, we find no additional negative effect of TBT STCs on exports. Fourth, the impact of TBTs on exports in value-added terms does not seem to differ from the impact on total gross exports. Journal: International Economic Journal Pages: 120-136 Issue: 1 Volume: 37 Year: 2023 Month: 01 X-DOI: 10.1080/10168737.2023.2176903 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2176903 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:1:p:120-136 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2193159_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Thuy T. Nguyen Author-X-Name-First: Thuy T. Author-X-Name-Last: Nguyen Author-Name: Tien H. Duong Author-X-Name-First: Tien H. Author-X-Name-Last: Duong Author-Name: My T. T. Dinh Author-X-Name-First: My T. T. Author-X-Name-Last: Dinh Author-Name: Thu T. M. Truong Author-X-Name-First: Thu T. M. Author-X-Name-Last: Truong Author-Name: Tram H. H. Pham Author-X-Name-First: Tram H. H. Author-X-Name-Last: Pham Title: The Role of Social Trust on Property Right Protection: Physical Property Versus Intellectual Property Abstract: While there have been numerous papers analyzing the political, economic and social effects of trust, there is little evidence on how social trust has an impact on property rights protection which is fundamental for promoting economic development. This study aims to investigate how trust value is related to property rights protection, focusing on the comparison of the effect on intellectual property rights versus physical property rights. Analyzing the data on property rights protection in 2015 from the Property Right Alliance organization and trust value from the World Value Survey from 1999 to 2014, we find that social trust has a direct effect only on intellectual property rights protection but less consistent on physical property rights protection. However, trust value has indirect effect on both forms of property rights protection via formal institutions. Our study, thus, adds to the literature by clarifying the context through which trust value affects cheating behaviors. Journal: International Economic Journal Pages: 177-201 Issue: 2 Volume: 37 Year: 2023 Month: 04 X-DOI: 10.1080/10168737.2023.2193159 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2193159 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:2:p:177-201 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2207086_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Luccas Assis Attílio Author-X-Name-First: Luccas Assis Author-X-Name-Last: Attílio Title: Impact of Oil and Agricultural Shocks on the Financial Markets of Emerging Market Economies Abstract: We assess oil and agricultural price shocks in the financial markets of six EMEs (Brazil, Chile, Mexico, India, South Africa, and Turkey) using the GVAR. Positive oil price shocks provoke falls in all stock markets, devaluations in four domestic currencies, and tight monetary policies in two economies. The variance decomposition indicated that this shock is more influential in the stock markets, followed by the exchange rates. Compared to the oil price, shocks in agricultural prices caused appreciations in all domestic currencies. This shock is pervasive in all exchange markets in the first months, losing importance over time. The distinct responses to different commodities shocks point out that the kind of shock is relevant to comprehend its influence on EMEs. We detected relevant heterogeneities concerning the spreading of commodities shocks on domestic financial markets, especially in South Africa. Journal: International Economic Journal Pages: 270-293 Issue: 2 Volume: 37 Year: 2023 Month: 04 X-DOI: 10.1080/10168737.2023.2207086 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2207086 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:2:p:270-293 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2184845_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Sagnik Bagchi Author-X-Name-First: Sagnik Author-X-Name-Last: Bagchi Author-Name: Sayantan Bandhu Majumder Author-X-Name-First: Sayantan Author-X-Name-Last: Bandhu Majumder Author-Name: Somdutta Banerjee Author-X-Name-First: Somdutta Author-X-Name-Last: Banerjee Title: Institutions Determine Debt–Growth Relationship: Evidence from Fourth Wave of Debt in EMDEs Abstract: The last decade witnessed global debt levels to reach record high. In Emerging Market and Developing Economies (EMDEs) like never before, the (public and private) debt–GDP ratio has been dismally high. An upward spree of the debt–GDP ratio coupled with a looming economic crisis led to concerns about institutional qualities (IQ). We explore how different dimensions of IQ (namely, political, legal and governance) impact the debt–growth relationship in the EMDEs amidst the current fourth wave of debt (2010–2019). We examine whether the relation is monotonic or it varies around a particular threshold value of IQ. By applying a dynamic panel threshold regression model, we obtain two regime-dependent marginal effects of regressors (upper and lower regimes) that are distinguished by a threshold value of IQ. Our results reveal that for each of our considered IQ, there exists a statistically significant threshold value. For public debt, across all dimensions of IQ debt hurts growth in the lower regime, while in the upper regime the association is favourable. While private debt is growth enhancing in the lower regime of all IQs (excepting corruption), while it is inimical in the upper regime. Journal: International Economic Journal Pages: 245-269 Issue: 2 Volume: 37 Year: 2023 Month: 04 X-DOI: 10.1080/10168737.2023.2184845 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2184845 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:2:p:245-269 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2212268_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Hodabalo Bataka Author-X-Name-First: Hodabalo Author-X-Name-Last: Bataka Author-Name: Wonyra Kwami Ossadzifo Author-X-Name-First: Wonyra Kwami Author-X-Name-Last: Ossadzifo Title: How ICTs Moderate the Effect of Global Value Chains’ Participation on Economic Growth in Sub-Saharan Africa? Abstract: Using data from Sub-Saharan African (SSA) countries over the period 1990–2015, this study examines the effects of Global Value Chains’ (GVCs) participation on economic growth by distinguishing participation in upstream, participation in downstream and sectors-based participation. The study also focuses on how the economic growth effect of GVCs’ participation can be affected by the ICTs. The Driscoll and Kraay’ estimation approach applied to the cross-lagged panel model enabled to overcome the cross-sectional dependence, heteroscedasticity, errors’ autocorrelation and reverse causality problems. The generalized method of moments (GMM) is further employed for the robustness check. The findings are robust and indicate that the GVCs’ participation (general, upstream, downstream and sectorial) boosts economic growth in SSA countries. These positive effects hold and are even more intensive when the GVCs’ participation is modulated by the ICTs. Furthermore, the study demonstrates that SSA countries should focus on the downstream GVCs’ participation that is the production and export of the (high technologies) intermediate goods that are essential for the production activities of other GVCs’ stakeholders. For the sectors-based participation, the study seems to show that participation in the services sector promotes more economic growth, followed to some extent by the mining, agriculture and manufacturing sectors. Journal: International Economic Journal Pages: 324-357 Issue: 2 Volume: 37 Year: 2023 Month: 04 X-DOI: 10.1080/10168737.2023.2212268 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2212268 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:2:p:324-357 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2207847_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Hakan Yilmazkuday Author-X-Name-First: Hakan Author-X-Name-Last: Yilmazkuday Title: Unequal Welfare Gains From Trade Across Countries: The Role of Aggregation and Income Elasticities Abstract: Sectoral heterogeneity has been shown to affect country-level welfare gains from trade (measured by costs of autarky) that can be calculated by sector-specific trade elasticities and home expenditure shares. However, empirical analyses of multi-sector models are restricted to a limited number of countries and sectors, mostly due to the lack of data on sector-specific home expenditure shares. This paper first proposes a solution to this limitation by changing the way that foreign products are aggregated at the destination country, where ‘unbiased’ multi-sector welfare gains can be captured by using country-specific trade elasticity measures. Second, the restrictive assumption of unitary importer-income elasticity is relaxed, and it is shown that the trade elasticity in the calculation of welfare gains is replaced by the newly-introduced welfare elasticity, a function of trade and income elasticities. Empirical evidence suggests that equal percentage changes in home expenditure shares result in unequal gains across countries depending on their elasticity measures. Journal: International Economic Journal Pages: 137-176 Issue: 2 Volume: 37 Year: 2023 Month: 04 X-DOI: 10.1080/10168737.2023.2207847 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2207847 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:2:p:137-176 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2182814_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Mert Akyuz Author-X-Name-First: Mert Author-X-Name-Last: Akyuz Author-Name: Ghislain Nono Gueye Author-X-Name-First: Ghislain Nono Author-X-Name-Last: Gueye Author-Name: Cagin Karul Author-X-Name-First: Cagin Author-X-Name-Last: Karul Title: Revisiting the Long-Run Relationship Between Inward/Outward FDI and Income Inequality: New Evidence from the OECD Abstract: The relatively small panel cointegration literature on the dynamics between FDI and income inequality predominantly finds that FDI will reduce income inequality in the long-run in developed countries. However, we point out an important technical oversight in the literature. Not accounting for cross-section dependence in panel data methodologies may yield unreliable results. Expanding on the work of Herzer and Nunnenkamp [(2013). Inward and outward FDI and income inequality: Evidence from Europe. Review of World Economics, 149(2), 395–422. https://doi.org/10.1007/s10290-013-0148-3], who pioneered the use of panel cointegration in the European context, we obtain different results when we account for cross-section dependence and employ economic procedures robust to it. Using a panel containing 16 OECD countries (1979–2017), 2 income inequality measures, and 4 FDI measures, we begin by showing strong evidence for the existence of cross-section dependence. Then, using second-generation econometric procedures, we do not find any evidence for a cointegrating relationship between inward FDI and income inequality. We do find evidence that outward FDI is cointegrated with income inequality; however, contrary to the main results of the literature, we find that it widens the income gap in the long-run. Additionally, our results support the view that fiscal policy is an important tool to reduce income inequality. Journal: International Economic Journal Pages: 220-244 Issue: 2 Volume: 37 Year: 2023 Month: 04 X-DOI: 10.1080/10168737.2023.2182814 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2182814 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:2:p:220-244 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2212251_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Daniel Machado Author-X-Name-First: Daniel Author-X-Name-Last: Machado Author-Name: José Alberto Fuinhas Author-X-Name-First: José Alberto Author-X-Name-Last: Fuinhas Title: Income Inequality and Economic Freedom Revisited: Are Freedom and Equality Conflicting Values? Evidence from the twenty-first Century Abstract: This empirical research addressed the short – and long-run relationship between economic freedom (and its subcomponents) and income inequality using a panel of 102 countries between 2000 and 2018. The results of employing an autoregressive distributed lag model showed that economic freedom has a detrimental impact on income inequality measured by any of the main inequality indicators. However, the results point to a relatively inelastic relationship. Additionally, the study explored the interactions between the subcomponents of economic freedom and income inequality, again pointing to a rigid relationship. While the size of the government and legal property rights increase income inequality, deregulation exerts the opposite effect. This paper closes with future guidelines for research. Journal: International Economic Journal Pages: 294-323 Issue: 2 Volume: 37 Year: 2023 Month: 04 X-DOI: 10.1080/10168737.2023.2212251 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2212251 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:2:p:294-323 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2194292_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Gordon Reikard Author-X-Name-First: Gordon Author-X-Name-Last: Reikard Title: Forecasting Exchange Rates with Neural Networks: Time Variation, Nonstationarity, and Causal Models Abstract: There are two major issues in using artificial intelligence to forecast exchange rates, choice of methodology and choice of causal models. A further complication is the nonstationarity of the data. This study compares artificial neural networks, nonlinear regressions and recurrent neural networks, using seven econometric models, in forecasting four major exchange rates over horizons of 1–3 months. The models are trained over moving windows and estimated in both levels and differences. There are three key findings. First, the multilayer perceptron nearly always achieves the most accurate forecasts, with the regressions in second place. The recurrent neural network places a distant third. Second, at horizons of 1 and 2 months, the perceptron is usually better in differences. At the 3-month horizon, however, the accuracy in differences deteriorates. Third, the perceptron favors models including international differentials in price levels, interest rates and yields, which achieve the best forecasts in the majority of cases. Several other models are competitive. One is the familiar Dornbusch-Frankel equation which uses differentials in inflation, output, interest rates and money supplies. Another is a combined model, the Dornbusch-Frankel equation with an additional term for the yield differential. Models using differentials in real interest rates do well in one instance. Journal: International Economic Journal Pages: 202-219 Issue: 2 Volume: 37 Year: 2023 Month: 04 X-DOI: 10.1080/10168737.2023.2194292 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2194292 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:2:p:202-219 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2220300_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Ngoc Thang Doan Author-X-Name-First: Ngoc Thang Author-X-Name-Last: Doan Author-Name: Manh Ha Tran Author-X-Name-First: Manh Ha Author-X-Name-Last: Tran Title: Quantifying the Effect of Economic Sanctions on Trade in Cultural Goods Abstract: The question of whether the imposition of economic sanctions impairs or nurtures cultural affinity remains controversial. In effect, this paper investigates the effect of economic sanctions on the trade of cultural goods as a proxy for cultural proximity, using cross-country data with 5,304 country pairs ranging from the years 1996–2019. Through extensive robustness checks, our main findings reveal that economic sanctions drive up the trade of cultural goods. The effect on the trade of cultural goods is heterogeneous across various forms of economic sanctions. While military, arms, trade, and travel sanctions are trade facilitators, financial and other sanctions are trade barriers. These effects are conditional on the level of economic development in the sanctioned countries and change over time. Our findings suggest cultural implications of economic sanctions in foreign policy design. Journal: International Economic Journal Pages: 401-423 Issue: 3 Volume: 37 Year: 2023 Month: 07 X-DOI: 10.1080/10168737.2023.2220300 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2220300 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:3:p:401-423 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2239204_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Hyungsuk Lee Author-X-Name-First: Hyungsuk Author-X-Name-Last: Lee Author-Name: Junsang Lee Author-X-Name-First: Junsang Author-X-Name-Last: Lee Title: Aggregate Markup and Its Impact on Income Inequality: Country Panel Evidence Abstract: This study investigates the relationship between market power, as measured by aggregate markups, and income inequality across 34 countries between 1991 and 2016. We find that market power is positively associated with income inequality in developing countries, while the relationship between markups and income inequality in advanced economies is more nuanced and statistically insignificant. Our study reveals that a higher collective bargaining rights mitigate the impact of market power on income inequality, emphasizing the importance of robust worker protection systems for fostering a more equitable labor market environment. Journal: International Economic Journal Pages: 387-400 Issue: 3 Volume: 37 Year: 2023 Month: 07 X-DOI: 10.1080/10168737.2023.2239204 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2239204 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:3:p:387-400 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2242844_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: JaeBin Ahn Author-X-Name-First: JaeBin Author-X-Name-Last: Ahn Author-Name: Jee-Hyeong Park Author-X-Name-First: Jee-Hyeong Author-X-Name-Last: Park Title: Contracting with Enemies? Vertical FDI with Outsourcing Contracts Abstract: An exploration of Korean MNCs' foreign affiliate-level data reveals that a significant portion of manufacturing foreign affiliates sell both to related and unrelated firms at the same time. We refer to this as hybrid vertical FDI. We rationalize the presence of hybrid vertical FDI by modifying the otherwise standard property-rights model of global sourcing with the subsidiary-level option of supplying inputs to unrelated customers in addition to related firms. Given the positive production externality from serving additional customers (that is proportional to the MNC's productivity) and the costs of getting such benefit (that are increasing in relationship-specificity of the outsourced inputs), the model generates following testable hypotheses: Both MNCs' likelihood of choosing hybrid over pure vertical FDI and their foreign affiliate firms' related-firm sales ratio over unrelated-firm go up when the productivity of foreign affiliates increases (but such tendencies weaken when contractual complexity goes up), which our subsequent empirical analysis robustly confirms. Journal: International Economic Journal Pages: 359-386 Issue: 3 Volume: 37 Year: 2023 Month: 07 X-DOI: 10.1080/10168737.2023.2242844 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2242844 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:3:p:359-386 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2229282_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Yanliang Miao Author-X-Name-First: Yanliang Author-X-Name-Last: Miao Author-Name: Xuan Fei Author-X-Name-First: Xuan Author-X-Name-Last: Fei Author-Name: Jingyi Sun Author-X-Name-First: Jingyi Author-X-Name-Last: Sun Author-Name: Hao Yang Author-X-Name-First: Hao Author-X-Name-Last: Yang Title: The Impact of the US-China Trade War on Chinese Firms' Investment Abstract: We study the effects of the US-China trade war on Chinese firms' investment using the detailed quarterly financial data of Chinese listed firms merged with firm-level Chinese customs data. We construct the firm-level measures of direct trade exposure and the financial measures of indirect exposures to the US-China trade tension using firms' equity responses during the trade war escalation periods. We document that the trade war reduced Chinese firms' investment by two percent. In particular, we find significant heterogeneous firms' responses to the trade war, depending on their firm characteristics. Chinese firms that are more dependent on exports to the US have lower stock returns; large firms and state-owned firms suffer more compared to small firms and private-owned ones. Journal: International Economic Journal Pages: 485-510 Issue: 3 Volume: 37 Year: 2023 Month: 07 X-DOI: 10.1080/10168737.2023.2229282 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2229282 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:3:p:485-510 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2239205_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Kyung Hyun Kim Author-X-Name-First: Kyung Hyun Author-X-Name-Last: Kim Author-Name: Soohyung Lee Author-X-Name-First: Soohyung Author-X-Name-Last: Lee Title: Cayman Over China: Trends and Accounting Factors of South Korea’s Outward Foreign Direct Investment Abstract: We examine recent trends of South Korea’s outward foreign direct investment from 2001 to 2021, which shows substantial change in terms of the total amount and compositions. Using gravity models, we test whether these differential time trends across the industries and destination countries survive after incorporating economic factors. Controlling for economic conditions, we find that the FDI to China has been declining much earlier than the China–South Korea political dispute, while the FDI to USA shows a steady increase, making it the top FDI destination throughout the sample period. Investment in tax haven shows rapid increase across all sizes of South Korean investors and therefore, further research is needed on its implications for tax evasion. Journal: International Economic Journal Pages: 424-445 Issue: 3 Volume: 37 Year: 2023 Month: 07 X-DOI: 10.1080/10168737.2023.2239205 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2239205 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:3:p:424-445 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2229287_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Honsoo Kim Author-X-Name-First: Honsoo Author-X-Name-Last: Kim Author-Name: Soojin Kim Author-X-Name-First: Soojin Author-X-Name-Last: Kim Author-Name: Wonshik Kim Author-X-Name-First: Wonshik Author-X-Name-Last: Kim Author-Name: Kyung Hoon Yang Author-X-Name-First: Kyung Author-X-Name-Last: Hoon Yang Title: Dynamic Effects of Long-Term Care Insurance on Healthcare Expenditures: Evidence from South Korea Abstract: Long-term care expenses pose a large financial risk to the elderly. In 2008, South Korea introduced a public long-term care insurance (LTCI) program for individuals older than 65. We study the dynamic effects of the LTCI on various healthcare expenditures. We find that after the implementation of the LTCI, average prescription drug and outpatient expenditures of the elderly increased. Dynamically, we observe that the growth in these expenditures moderates. We also find suggestive evidence that after the introduction of the LTCI, the elderly may utilize LTC hospitals instead of inpatient hospital services. These findings underscore the importance of understanding the long-term effects of LTCI on health and healthcare expenditures of the elderly and the need to account for interactions between LTC and other types of healthcare services in policy design. Journal: International Economic Journal Pages: 446-461 Issue: 3 Volume: 37 Year: 2023 Month: 07 X-DOI: 10.1080/10168737.2023.2229287 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2229287 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:3:p:446-461 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2227161_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Aomar Ibourk Author-X-Name-First: Aomar Author-X-Name-Last: Ibourk Author-Name: Zakaria Elouaourti Author-X-Name-First: Zakaria Author-X-Name-Last: Elouaourti Title: Revitalizing Women's Labor Force Participation in North Africa: An Exploration of Novel Empowerment Pathways Abstract: This paper explores new pathways to women's empowerment, including household structure, family support, satisfaction and self-esteem, and trust in institutions and politicians, and their impact on labor market participation, with a specific focus on gender differences. Using a microeconomic database of 7,860 individuals from North Africa and employing a Probit model, we find that gender significantly influences labor market participation. Surprisingly, our results reveal that education operates in an unexpected direction in the North African region, confirming the “MENA paradox”. Moreover, household structure's impact on labor decisions varies by gender, as gender norms prevalent in male-dominated societies hinder women's labor market participation, leading to a “marriage penalty.” In a similar vein, our estimations reveal a significant positive correlation between men's belief that “men should have greater job rights than women during scarce work periods” and their labor force participation, shedding light on the influential role of gender norms in North Africa. Our study emphasizes the critical role of networking, social capital, and how North Africans' perception of political life impedes their labor force participation. As for policy implications, our contribution illuminates new pathways for women's empowerment, advocating for comprehensive legislative reforms to promote gender equality and foster inclusive development. Journal: International Economic Journal Pages: 462-484 Issue: 3 Volume: 37 Year: 2023 Month: 07 X-DOI: 10.1080/10168737.2023.2227161 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2227161 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:3:p:462-484 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2263891_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Salamata Loaba Author-X-Name-First: Salamata Author-X-Name-Last: Loaba Title: Gender-Related Differences in Access to Financial Account in Sub-Saharan Africa Abstract: This study analyzes the factors that account for the difference in access to financial account between women and men. To do so, a probit model and Fairlie's ([2005]. An extension of the Blinder-Oaxaca decomposition technique to logit and probit models. Journal of Economic and Social Measurement, 30(4), 305–316. https://doi.org/10.3233/JEM-2005-0259) decomposition method were applied to survey data collected in 2021 in 25 sub-Saharan Africa countries. The results show that, on average, 43.73% of men have access to a financial account compared to only 32.7% of women. The analysis shows that the contribution of factors to the difference varies according to country’s level of development. The difference is explained more by observable characteristics in high-income countries (79.6%) than in low-income countries (65%). Secondary school education is the most decisive factor but the contribution varies according to country development level. In terms of implications, financial inclusion policies for women need to be adapted according to country realities. Thus, in order for women to benefit from financial inclusion policies, it is important to encourage the education of women at least at secondary level by reducing or even abolishing school fees, and also creating a conducive environment to keep women in the education system for as long as possible. Journal: International Economic Journal Pages: 601-617 Issue: 4 Volume: 37 Year: 2023 Month: 10 X-DOI: 10.1080/10168737.2023.2263891 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2263891 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:4:p:601-617 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2261016_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Md Aminur Rahman Author-X-Name-First: Md Aminur Author-X-Name-Last: Rahman Author-Name: Woo-Yung Kim Author-X-Name-First: Woo-Yung Author-X-Name-Last: Kim Title: Sectoral Wage Differentials in Bangladesh: A Comparison Between the Government and Other Ownerships Abstract: Most of the studies of wage discrimination in Bangladesh have calculated the gap between pairs of sectors, while this study uses multiple sectors using multinomial logit estimation where the sector selection is endogenous. The employment sector is divided into six heterogeneous sectors depending on ownership status. Using QLFS 2016–2017 data from the Bangladesh Bureau of Statistics, the probability of being employed in a certain sector is initially estimated by the sector choice equation, and then we estimate both the conditional and unconditional wage gaps between government and other sectors. The estimation result of the sector choice shows that the probability of being included in the government sector mostly depends on educational qualification, and the rural population is mostly included in marginal sectors like individual proprietorship. The decomposition of wage discrimination indicates that government employees have a wage advantage over every other sector, except for females. The decomposition result also suggests that the wage gap is mostly driven by discrimination, with NGOs showing the most discrimination in wages offered, followed by the individual sector. Monitoring the wage structure and implementation of the minimum wage is our main policy recommendation, along with others. Journal: International Economic Journal Pages: 713-733 Issue: 4 Volume: 37 Year: 2023 Month: 10 X-DOI: 10.1080/10168737.2023.2261016 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2261016 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:4:p:713-733 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2261011_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Devi Prasad Dash Author-X-Name-First: Devi Prasad Author-X-Name-Last: Dash Author-Name: Narayan Sethi Author-X-Name-First: Narayan Author-X-Name-Last: Sethi Author-Name: Paresh Chandra Barik Author-X-Name-First: Paresh Chandra Author-X-Name-Last: Barik Title: Dynamics of Foreign Aid and Human Development in South and South-East Asia: Analyzing the Effectiveness of Macro-Institutional Factors Abstract: Does foreign aid impede or catalyze human development in South and South-East Asia post-1990s? We argue that foreign aid impacts human development negatively in the region overall due to the structural differences in infrastructure development, democratic regimes, patterns of external debt, trading intensity and other macroeconomic factors. Our empirical evidence further justifies that other than aid, improvements in infrastructure sectors and quality of democratic settings beget human development in the region. Considering further angles of external debt and domestic investment into the picture, we find that rising external debt negates, improves domestic investment and accelerates human development. While comparing both regions, we find a noticeable difference in the impacts of macro-institutional factors on human development. However, the impacts of aid on human development remain insignificant. Journal: International Economic Journal Pages: 646-674 Issue: 4 Volume: 37 Year: 2023 Month: 10 X-DOI: 10.1080/10168737.2023.2261011 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2261011 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:4:p:646-674 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2263844_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: William Ginn Author-X-Name-First: William Author-X-Name-Last: Ginn Title: World Output and Commodity Price Cycles* Abstract: This study investigates the cyclical patterns of energy, agriculture, and metals and minerals (MetMin) commodity prices. We identify three super cycles since 1960, and a potential fourth arising from the Ukraine crisis and global COVID-19 pandemic. Employing a Structural Vector Autoregression (SVAR) approach, we establish an empirical relationship between output, CPI, and commodity prices. Our analysis reveals that an output shock leads to a general increase in all commodity prices, where the highest impact is on energy inflation. Moreover, we examine the heterogeneous effects of commodity inflation on overall inflation, uncovering ‘second round' effects across all commodities. Notably, agriculture inflation has the most significant impact on aggregate inflation, potentially explaining the destabilizing nature of food inflation in many countries. Our findings enhance understanding of these dynamics, offering important insights for policymakers and informing the public.Highlights We analyze the cyclical patterns of energy, agriculture and MetMin commodity prices.Real output, CPI and commodities exhibit the same cyclical patterns.A shock to output increases all commodities, where the highest response is energy inflation.We find ‘second-round' effects, where agriculture prices have the highest impact on inflation. Journal: International Economic Journal Pages: 530-554 Issue: 4 Volume: 37 Year: 2023 Month: 10 X-DOI: 10.1080/10168737.2023.2263844 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2263844 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:4:p:530-554 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2255581_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Admasu Asfaw Maruta Author-X-Name-First: Admasu Asfaw Author-X-Name-Last: Maruta Title: Do Women Benefit from Women Education Aid? Evidence from Panel Data Abstract: Generally, the literature on aid focuses on the potential growth effects of aggregate aid. Due to the fact that donors have consistently asserted the multidimensionality of their purposes, it is necessary to conduct a much more disaggregated analysis of aid effectiveness. In this study, the effect of women education aid on 72 developing countries is examined empirically over the period 1990–2016. Using cross-country regression, this study examines the effectiveness of aid targeted at women’s education. Based on the fact that donors provide a large amount of women’s education aid to countries whose voting positions in the UN General Assembly are similar, this analysis exploits an instrumental variable. This study shows that women’s education aid has a significantly positive effect on women’s education. The results of this study are robust when different sensitivity checks are performed. The findings have significant policy implications for donor countries and international aid organizations, as they assist in identifying the most effective types of foreign aid flow to the various sectors of the recipient country’s economy. Journal: International Economic Journal Pages: 580-600 Issue: 4 Volume: 37 Year: 2023 Month: 10 X-DOI: 10.1080/10168737.2023.2255581 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2255581 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:4:p:580-600 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2251027_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Sylvester Senyo Horvey Author-X-Name-First: Sylvester Senyo Author-X-Name-Last: Horvey Author-Name: Dennis Boahene Osei Author-X-Name-First: Dennis Boahene Author-X-Name-Last: Osei Author-Name: Imhotep Paul Alagidede Author-X-Name-First: Imhotep Paul Author-X-Name-Last: Alagidede Title: Insurance Penetration and Inclusive Growth in Sub-Saharan Africa: Evidence from Panel Linear and Nonlinear Analysis Abstract: This study contributes to the emerging literature on the insurance industry in sub-Saharan Africa by investigating both the linear and nonlinear relationship between insurance penetration and inclusive growth. We employ a panel dataset in a system generalised method of moments approach and a dynamic panel threshold to account for endogeneity and turning points in the insurance-inclusive growth nexus. The linear evidence suggests a significant positive impact of insurance penetration (life, nonlife and total) on inclusive growth. Further, there exists a significant threshold level of nonlife and total insurance penetration, which countries must surpass to realise the positive impact of insurance on inclusive growth. The paper argues that below this threshold value, the relationship tends to be negative, suggesting a U-shaped relationship. We found no significant threshold for the life insurance industry. Important policy implications for fine-tuning the insurance industry to deliver the intended effects of managing risk in the wider economy are discussed. Journal: International Economic Journal Pages: 618-645 Issue: 4 Volume: 37 Year: 2023 Month: 10 X-DOI: 10.1080/10168737.2023.2251027 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2251027 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:4:p:618-645 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2261005_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Chul-Woo Kwon Author-X-Name-First: Chul-Woo Author-X-Name-Last: Kwon Author-Name: Uk Hwang Author-X-Name-First: Uk Author-X-Name-Last: Hwang Title: The Effect of Reshoring Policy on the Host and Home Countries Abstract: This theoretical study explores how a home country's policies influence where multinational companies choose to produce. The study models subsidy negotiations between firms and both the home and foreign countries, revealing that offering reshoring subsidies might lead to repatriation of the multinational firm. If the host country values job creation's welfare gain from reshoring, a large reshoring subsidy from the home government can be seen as socially acceptable and encourage reshoring. However, if the home governments prioritize job creation less and the foreign government aims to retain the firm, pushing for reshoring may increase costs for the foreign country and reduce its social welfare. Journal: International Economic Journal Pages: 555-579 Issue: 4 Volume: 37 Year: 2023 Month: 10 X-DOI: 10.1080/10168737.2023.2261005 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2261005 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:4:p:555-579 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2261012_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Mirwais Parsa Author-X-Name-First: Mirwais Author-X-Name-Last: Parsa Author-Name: Soumya Datta Author-X-Name-First: Soumya Author-X-Name-Last: Datta Title: Institutional Quality and Economic Growth: A Dynamic Panel Data Analysis of MICs and HICs for 2000–2020 Abstract: We investigate the dynamic impact of institutions on economic growth using a panel dataset of 77 countries, divided into MICs and HICs for the period 2000-2020. We critically examine the available institutional indices and construct three weighted indices from 20 indicators closely related to the meaning of the term ‘institutions’ as the ‘rules of the game’ defined by Douglas North. Next, we use the Generalized Method of Moments (GMM) to show that institutions significantly influence economic growth through investment and trade more than the total factor productivity channel. While the quality of the legal system and property rights and regulatory quality all positively and significantly influence output per capita, output gains from each unit of improvement in the quality of legal systems and protection of private property rights are comparatively higher than gains from a unit of improvement in the regulatory environment. An average MIC gains relatively more from improving its quality of legal system and property rights, whereas an average HIC benefits relatively more from each unit of improvement in its regulatory environment. The results from the Granger non-causality test demonstrate and unidirectional causality from institutions to economic growth in MICs but no significant causal relationship between institutions and economic growth in HICs Journal: International Economic Journal Pages: 675-712 Issue: 4 Volume: 37 Year: 2023 Month: 10 X-DOI: 10.1080/10168737.2023.2261012 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2261012 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:4:p:675-712 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2255852_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20230119T200553 git hash: 724830af20 Author-Name: Mui-Yin Chin Author-X-Name-First: Mui-Yin Author-X-Name-Last: Chin Author-Name: Sheue-Li Ong Author-X-Name-First: Sheue-Li Author-X-Name-Last: Ong Author-Name: Lee-Peng Foo Author-X-Name-First: Lee-Peng Author-X-Name-Last: Foo Author-Name: Simba Mutsvangwa Author-X-Name-First: Simba Author-X-Name-Last: Mutsvangwa Title: The Impact of COVID-19 on Trade Performance in the World Economy Abstract: The COVID-19 pandemic significantly disrupted international economic activities. This study examines its impact on the world economy, analyzing different regions and income groups separately. The empirical findings reveal that COVID-19 had a negative and substantial impact on global trade performance. Surprisingly, high-income countries experienced a positive impact on trade due to COVID-19, showing greater adaptability and, in some cases, emerging as exporters of medicines and COVID-19-related products. In contrast, middle-income and low-income countries did not observe any significant impact on trade performance from COVID-19. This finding implies that trade deterioration during the pandemic might be attributed to mediating factors rather than the direct influence of COVID-19 itself. Furthermore, when examining the effects by region, the results are mixed, reflecting the diverse characteristics of different regions. Consequently, it becomes evident that the COVID-19 pandemic has exacerbated existing inequalities, with the trade performance of affluent and advanced countries being the least negatively affected. In conclusion, the COVID-19 pandemic had far-reaching consequences on global trade, impacting various regions and income groups differently. The study highlights the need for targeted policies to address the disparities in trade performance and foster a more resilient and equitable global economy. Journal: International Economic Journal Pages: 511-529 Issue: 4 Volume: 37 Year: 2023 Month: 10 X-DOI: 10.1080/10168737.2023.2255852 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2255852 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:37:y:2023:i:4:p:511-529 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2300309_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20231214T103247 git hash: d7a2cb0857 Author-Name: Dinh Trung Nguyen Author-X-Name-First: Dinh Trung Author-X-Name-Last: Nguyen Author-Name: Kim Thanh Duong Author-X-Name-First: Kim Thanh Author-X-Name-Last: Duong Author-Name: Huong Thi Thu Phung Author-X-Name-First: Huong Thi Thu Author-X-Name-Last: Phung Author-Name: Mai Quynh Ha Author-X-Name-First: Mai Quynh Author-X-Name-Last: Ha Title: Pandemics and Economic Complexity: A Cross-Country Analysis Abstract: This paper is the first attempt to empirically examine the impact of pandemics on economic complexity in a cross-country setting. We employ a unique and recently developed measure of pandemic intensity, which is the World Pandemic Discussion Index. Using panel-corrected standard error regressions on a panel dataset of 90 countries from 1996 to 2019, we find that an increase in pandemic discussion could reduce economic complexity. Further heterogeneity tests show that this detrimental effect of pandemics only occurs in emerging and low-income countries, or in countries with low levels of institutional quality. By using mechanism analysis, we also find that pandemics reduce economic complexity via deteriorating the quality of human capital. These findings are robust to a comprehensive battery of robustness and sensitivity checks. Overall, our paper could provide valuable implications for policy makers in devising measures to support the economic recovery process post-pandemics. Journal: International Economic Journal Pages: 103-129 Issue: 1 Volume: 38 Year: 2024 Month: 01 X-DOI: 10.1080/10168737.2023.2300309 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2300309 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:1:p:103-129 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2286946_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20231214T103247 git hash: d7a2cb0857 Author-Name: Munmi Saikia Author-X-Name-First: Munmi Author-X-Name-Last: Saikia Title: Tax Cost: Does It Deter Foreign Direct Investment (FDI)? Abstract: Yes, it does. My study investigates the question, ‘does tax cost deter FDI?’ by employing a rich dataset of bilateral FDI between the OECD developed countries and developing countries. The argument posed in the study is – ‘tax cost deters FDI as it straightway reduces the profitability of multinational firms’. The contribution of the study to the empirical literature of international economics is noteworthy. It adds to the literature by estimating the partial effect of tax cost on FDI while drawing on the gravity framework as its analytical approach. By utilizing the empirical exercise, the study draws the inference that the tax cost indeed substantially deters FDI. Furthermore, the study explores – ‘how does parent’s tax system – the worldwide tax system and the territorial tax system affect the sensitivity of FDI to tax cost?’ The study affirms that FDI reacts differently depending on the parents’ tax system. The study also examines the effect of host-country differences on the responsiveness of FDI to tax cost. Additionally, the study also empirically validates the ‘regionalists’ argument’. Journal: International Economic Journal Pages: 62-85 Issue: 1 Volume: 38 Year: 2024 Month: 01 X-DOI: 10.1080/10168737.2023.2286946 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2286946 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:1:p:62-85 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2298943_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20231214T103247 git hash: d7a2cb0857 Author-Name: Kazunobu Hayakawa Author-X-Name-First: Kazunobu Author-X-Name-Last: Hayakawa Author-Name: Juthathip Jongwanich Author-X-Name-First: Juthathip Author-X-Name-Last: Jongwanich Author-Name: Archanun Kohpaiboon Author-X-Name-First: Archanun Author-X-Name-Last: Kohpaiboon Title: The Trade Effect of Non-tariff Measures in a Comprehensive Trade Agreement Abstract: The aim of this study is to quantify the trade effects of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which is considered to be a comprehensive trade agreement. To this end, we estimate the gravity equation for worldwide trade and introduce applied tariffs into this equation to differentiate between the trade effects of tariff reduction and non-tariff measure (NTM) changes. Our gravity equation results indicate that the trade effect of NTM changes under the CPTPP is insignificant on average and negative for most products. We also estimate the gravity equation for foreign direct investment (FDI) and find some evidence that the CPTPP increased FDI by a statistically significant amount. Thus, the NTM changes in the CPTPP may increase FDI, rather than trade, among member countries. Journal: International Economic Journal Pages: 45-61 Issue: 1 Volume: 38 Year: 2024 Month: 01 X-DOI: 10.1080/10168737.2023.2298943 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2298943 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:1:p:45-61 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2286955_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20231214T103247 git hash: d7a2cb0857 Author-Name: Guivis Zeufack Nkemgha Author-X-Name-First: Guivis Zeufack Author-X-Name-Last: Nkemgha Author-Name: Symphorien Engone Mve Author-X-Name-First: Symphorien Author-X-Name-Last: Engone Mve Author-Name: Tekam Oumbé Honoré Author-X-Name-First: Tekam Author-X-Name-Last: Oumbé Honoré Author-Name: Alim Belek Author-X-Name-First: Alim Author-X-Name-Last: Belek Title: Linking Industrialization and Environmental Quality in Sub-Saharan Africa: Does the Environmental Policy Stringency Matter? Abstract: This paper contributes to the literature on the relationship between industrialization and environmental quality. Despite an abundant literature on the subject, existing studies have not yet investigated the role of environmental policy stringency in the transmission of the effects of industrialization on environmental quality. This study uses a panel of 24 countries in sub-Saharan Africa (SSA) with data covering the period 2000–2020. The use of the system GMM methodology shows that industrialization – measured by – the value added of industry and the value added of manufacturing – significantly deteriorates the quality of the environment. However, the introduction of the environmental policy stringency variable as a transmission channel produces a detrimental effect of industrialization on CO2 emissions up to thresholds of 37.33 and 37 respectively for the industrial sector and the manufacturing sector. For an environmental policy stringency above these thresholds, industrialization significantly reduces CO2 emissions. Finally, we found the Environmental Kuznets Curve between economic growth and CO2 emissions. Thus, a strengthening of environmental policy can help these countries to develop a virtuous relationship between industrialization and the quality of the environment. Journal: International Economic Journal Pages: 166-184 Issue: 1 Volume: 38 Year: 2024 Month: 01 X-DOI: 10.1080/10168737.2023.2286955 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2286955 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:1:p:166-184 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2275306_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20231214T103247 git hash: d7a2cb0857 Author-Name: Luigi Ventura Author-X-Name-First: Luigi Author-X-Name-Last: Ventura Author-Name: Mark David Witte Author-X-Name-First: Mark David Author-X-Name-Last: Witte Title: How Wide is the Euro? Abstract: This paper examines the impact of Euro invoicing on Italian exports to non-EU countries. In addition to examining the role of currency invoicing on the intensive and extensive margin of trade, we introduce the ‘entrenched’ margin of trade. We define the entrenched margin of trade as the number of transactions between two countries of a particular good. With highly disaggregated data, we use a two-stage methodology to predict the probability of Euro dominated Italian exports and then use that predicted probability on the intensive, extensive and entrenched margin of trade. Results show that the probability of Euro dominated trade invoicing reduces all three margins of trade. Specifically, a 10% increase in probability of Euro dominated Italian exports has roughly the same impact as additional 1532 km on the intensive margin of trade, 1096 km on the extensive margin of trade and 1314 km on the entrenched margin of trade. The negative effect of Euro invoicing is most consistent with lower-middle income trading partners and more thinly traded goods. We surmise that these results are due to varying access to financial instrumentation among Italian trade partners and a trade diversion effect of Italian exports to EU countries versus non-EU markets. Journal: International Economic Journal Pages: 86-102 Issue: 1 Volume: 38 Year: 2024 Month: 01 X-DOI: 10.1080/10168737.2023.2275306 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2275306 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:1:p:86-102 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2286976_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20231214T103247 git hash: d7a2cb0857 Author-Name: Jin Lee Author-X-Name-First: Jin Author-X-Name-Last: Lee Author-Name: Hangyong Lee Author-X-Name-First: Hangyong Author-X-Name-Last: Lee Title: Macroeconomic Fundamentals and the Volatility of Foreign Investors’ Net Purchase in Korean Stock Market Abstract: We employ the GARCH-MIDAS model to examine whether low-frequency macroeconomic variables help to explain the high-frequency volatility of the foreign investors’ net purchase in Korean stock market. The estimation results show that business cycle expansion along with high production growth, high inflation and low unemployment rate predicts high volatility in the near future. Higher interest rate and lower money growth are also likely to lead to higher volatility of foreign investors’ net purchase. We also find that domestic macroeconomic variables, relative to the US variables, have a stronger correlation with the future volatility of foreign investors’ net purchase. Journal: International Economic Journal Pages: 150-165 Issue: 1 Volume: 38 Year: 2024 Month: 01 X-DOI: 10.1080/10168737.2023.2286976 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2286976 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:1:p:150-165 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2300301_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20231214T103247 git hash: d7a2cb0857 Author-Name: Thomas Goda Author-X-Name-First: Thomas Author-X-Name-Last: Goda Author-Name: Santiago Sánchez González Author-X-Name-First: Santiago Author-X-Name-Last: Sánchez González Title: Export Market Size Matters: The Effect of the Market Size of Export Destinations on Manufacturing Growth Abstract: Literature contends that the manufacturing sector is crucial for economic development, and it is conventional wisdom that exports drive manufacturing growth. However, it has yet to be established empirically whether the market size of export destinations is an essential factor in explaining diverging regional and sectoral manufacturing growth patterns. This article argues that accessing a few large external markets reduces entry costs, increases expectations of economies of scale, and fosters capital formation. To test this hypothesis, we construct a novel Relative Export Market Size (REMS) index that measures whether the share of sectoral exports destined to large economies in one region is higher than in other regions. Using a PVAR model with fixed effects, we verify the impact of the REMS index on value added, employment, and capital accumulation of 129 manufacturing sectors in 23 regions in Colombia from 1992 to 2017. The obtained results show that exporting to larger markets positively impacts employment, capital formation, and value added per capita of manufacturing sectors at a regional level. This finding indicates that exporting to the world’s largest market helps develop competitive manufacturing sectors. Journal: International Economic Journal Pages: 21-44 Issue: 1 Volume: 38 Year: 2024 Month: 01 X-DOI: 10.1080/10168737.2023.2300301 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2300301 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:1:p:21-44 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2301977_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20231214T103247 git hash: d7a2cb0857 Author-Name: Yang Seung Lee Author-X-Name-First: Yang Seung Author-X-Name-Last: Lee Title: The Impact of Trust on Intra-Industry Resource Allocation and Aggregate Variables Abstract: This paper explores the relationship between firm expansion and job creation, focusing on how it contributes to overall income growth. It highlights the crucial factor of profitability in entrepreneurial decision to expand their firms. Various influences on this decision are discussed, with emphasizing trust. The paper argues that the dynamism of small firms plays a role in shaping the endogenous distribution of firm sizes. Trust is identified as a significant determinant of this dynamism. Employing a monopoly-competition model, the paper demonstrates that higher-ability entrepreneurs tend to select firm expansion. The model predicts a distinct pattern in the distribution of firm sizes, characterized by a cut-off point where entrepreneurs are classified. When the trust level is higher, entrepreneurs have greater incentives to expand their firms, resulting in a larger population of large firms and increased aggregate income. The paper concludes with a policy implication, suggesting that governments should strive to create a higher level of trust conducive to firm expansion if their objective is to boost aggregate income. Overall, this paper contributes to the existing literature on entrepreneurship and firm-size distribution. Journal: International Economic Journal Pages: 130-149 Issue: 1 Volume: 38 Year: 2024 Month: 01 X-DOI: 10.1080/10168737.2024.2301977 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2301977 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:1:p:130-149 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2298952_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20231214T103247 git hash: d7a2cb0857 Author-Name: Kunhyui Kim Author-X-Name-First: Kunhyui Author-X-Name-Last: Kim Title: Non-tariff Measures on the Production Network: Analysis on the Forward and Backward Participation in Global Value Chains Abstract: Unlike the sound purposes of the NTMs to shape the necessary protection to ensure consumers and environmental safety, the majority of the past literature often addressed the adverse impact of NTMs on international trade. Among the past literature, only a handful of studies dealt with the relationship between non-tariff measures and participation in global value chains. We address two research questions. First, what are the impacts of technical regulations on participation in global value chains? Second, does the impact of technical regulations differ across the sectors? With the recently published non-tariff measures data from UNCTAD-TRAINS, this study constructs the Additional Compliance Requirement Indicator to test whether technical regulations facilitated or sabotaged the backward and forward participation in global value chains. The results indicate that additional burdens for exporters hamper global value chain participation through both backward and forward participation. Moreover, technical regulations in the agriculture sector seem to be more harmonized compared to the manufacturing sector. As technical regulations often serve as sound measures to shape the necessary protection for consumers and environmental safety, harmonization of the technical regulations is preferred rather than mere eradication. Journal: International Economic Journal Pages: 1-20 Issue: 1 Volume: 38 Year: 2024 Month: 01 X-DOI: 10.1080/10168737.2023.2298952 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2298952 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:1:p:1-20 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2320116_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: William Ginn Author-X-Name-First: William Author-X-Name-Last: Ginn Title: Does ENSO Impact Equity Returns? Evidence via Country and Panel Regression Abstract: This study employs a panel local projections (LP) model to analyze the influence of El Niño (EN), La Niña (LN) Southern Oscillation (ENSO) on real equity returns based on twenty economies, collectively accounting for 80.2% of global output. We demonstrate that an ENSO shock has a delayed and oscillatory effect on equity returns, where the most significant impact is positive (negative) during an EN (LN) phase. We further analyze the climate state by each of the twenty economies. The literature shows that the effect of an ENSO shock on economic growth can vary across different economies. A main finding is that we show a near uniform result similar to the panel LP model, which we posit is driven in part by strong interconnections of financial markets on a global scale. These findings offer valuable insights for policymakers and investors.Highlights We estimate a panel and economy-specific climate ENSO switching via LP model.Twenty economies representing 80.2% of global output are analyzed.ENSO shock has a delayed and oscillatory effect on equity returns.Most significant impact of an ENSO shock on equity returns is positive (negative) during an EN (LN) phase. Journal: International Economic Journal Pages: 345-364 Issue: 2 Volume: 38 Year: 2024 Month: 04 X-DOI: 10.1080/10168737.2024.2320116 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2320116 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:2:p:345-364 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2290534_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Hoyong Jung Author-X-Name-First: Hoyong Author-X-Name-Last: Jung Author-Name: Seungwoo Chin Author-X-Name-First: Seungwoo Author-X-Name-Last: Chin Title: Effects and Channels of Smoking on College Students’ Labor Market Performance Abstract: This study investigates the impact of smoking on the labor market performance of college graduates, utilizing representative data from South Korea. To mitigate endogeneity concerns, we employ the average cigarette price during participants’ college years as an instrumental variable for smoking behaviors. The findings reveal a detrimental effect of smoking on the labor market outcomes of college students. Smokers are significantly less likely to secure employment, and if employed, they tend to earn lower salaries. Notably, these adverse effects are more pronounced among female students. Through a behavioral and human capital lens, we discern the mechanism by which smoking impairs labor market performance. While smoking may initially contribute to positive aspects such as enhanced social activities, subjective mental health, and psychological stability among college students, it is concurrently associated with lower academic achievement, impeding human capital accumulation. These results suggest that although smoking may yield short-term benefits, it undermines long-term human capital development. The implications advocate for governmental intervention to mitigate the negative consequences of youth smoking. Journal: International Economic Journal Pages: 212-235 Issue: 2 Volume: 38 Year: 2024 Month: 04 X-DOI: 10.1080/10168737.2023.2290534 File-URL: http://hdl.handle.net/10.1080/10168737.2023.2290534 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:2:p:212-235 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2311704_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Manh Hung Pham Author-X-Name-First: Manh Hung Author-X-Name-Last: Pham Author-Name: Hoang Diep Huong Truong Author-X-Name-First: Hoang Diep Huong Author-X-Name-Last: Truong Author-Name: Dung Phuong Hoang Author-X-Name-First: Dung Phuong Author-X-Name-Last: Hoang Title: Economic Complexity, Shadow Economy, and Income Inequality: Fresh Evidence from Panel Data Abstract: This research attempts to examine the effects of economic complexity and shadow economy on income inequality for a panel dataset of 99 countries. The two-step system GMM estimation is employed to capture the non-linear relationships among interested variables. The findings indicate that income disparity is significantly and non-linearly linked with economic complexity and gray economy. First, there exists a U-shaped relationship between economic complexity and income disparity. The turning point for which the effect of economic complexity on income inequality changes from negative to positive is −0.732. Second, the impact of the shadow economy on income inequality displays an inverted U-shaped pattern. The estimated threshold above which the marginal effect of the shadow economy on income inequality changes from positive to negative equals 15.6%. Given the complications of these relationships, the governments are advised to take into consideration the situation of these two socio-economic issues when developing income distribution-related policies. Journal: International Economic Journal Pages: 270-292 Issue: 2 Volume: 38 Year: 2024 Month: 04 X-DOI: 10.1080/10168737.2024.2311704 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2311704 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:2:p:270-292 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2331463_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Waqar Ahmad Author-X-Name-First: Waqar Author-X-Name-Last: Ahmad Author-Name: Babar Hussain Author-X-Name-First: Babar Author-X-Name-Last: Hussain Title: Shadow Economy and Environmental Pollution Nexus in Developing Countries: What is the Role of Corruption? Abstract: The objective of this study is to investigate the effects of the shadow economy on environmental pollution and how this effect depends on the levels of corruption. The study utilizes an annual panel dataset of 127 selected developing countries worldwide, spanning from 2002 to 2018, and employs the Generalized Method of Moments (GMM) technique, which effectively addresses potential endogeneity issues in the model. The estimation results reveal that the shadow economy increases the level of environmental pollution. Furthermore, the results indicate that corruption intensifies the impacts of the shadow economy on environmental pollution. This highlights a significant complimentary between the shadow economy and corruption, indicating that an increase in the levels of corruption will lead to an increase the shadow economy and will also strengthen its harmful impact on environmental pollution through the channel of corruption. Additionally, the estimates remain robust when using alternative measure of the shadow economy. Journal: International Economic Journal Pages: 293-311 Issue: 2 Volume: 38 Year: 2024 Month: 04 X-DOI: 10.1080/10168737.2024.2331463 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2331463 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:2:p:293-311 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2302819_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Isaac Amedanou Author-X-Name-First: Isaac Author-X-Name-Last: Amedanou Title: Fiscal Fatigue, Public Debt Structure and Sustainability: A DSGE Model for West African Economic and Monetary Union Abstract: The present paper simulates several financing schemes for scaling-up public investment while stabilizing debt in WAEMU countries experiencing fiscal fatigue. We construct a DSGE model of a small open economy that incorporates the behaviour of four types of agents: firms, households, government, and the Central Bank. The analysis assumes that when the government faces fiscal fatigue, it can turn to debt to finance the scaling-up of public investment. To ensure long-term debt sustainability, fiscal adjustments are consistently implemented through transfers and/or taxes, subject to respective caps and floors. Simulations indicate that, in the presence of natural resource revenues, scaling up public investment is feasible using concessional borrowing only or by incorporating additional external commercial or domestic borrowing while maintaining debt sustainability. Otherwise, external commercial debt appears to carry more risk. Journal: International Economic Journal Pages: 312-344 Issue: 2 Volume: 38 Year: 2024 Month: 04 X-DOI: 10.1080/10168737.2024.2302819 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2302819 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:2:p:312-344 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2320121_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Kabelo Collen Makhanya Author-X-Name-First: Kabelo Collen Author-X-Name-Last: Makhanya Author-Name: Lumengo Bonga-Bonga Author-X-Name-First: Lumengo Author-X-Name-Last: Bonga-Bonga Author-Name: Mathias Mandla Manguzvane Author-X-Name-First: Mathias Mandla Author-X-Name-Last: Manguzvane Title: Examining the Dependence Structure Between Carry Trade and Equity Market Returns in BRICS Economies Abstract: This paper contributes to the literature on carry trade by investigating the dynamic correlation and the dependence structure between the US-dollar carry trade and equity markets in the (Brazil, Russia, India, China and South Africa (BRICS)) economies during sample observations that include regular and crisis periods. Furthermore, the nonlinear Granger causality test based on the feed-forward neural networks (FFNN) model assesses how global volatility predicts the dynamic correlation between the US-dollar carry trade and equity markets in BRICS. The paper finds the dynamic correlations between carry trade and equity markets in BRICS are more pronounced during most global crises. Moreover, the results of the symmetrised Joe Clayton (SJC) copula model showed that the lower tail dependence between the two series is higher during the various crises. Furthermore, the results of the empirical analysis show that global volatility predicts the dynamic correlations between carry trade and equity markets in BRICS only during crises. Asset managers and investors can benefit from this paper's findings regarding portfolio diversification, risk management, asset allocation, and hedging when dealing with equity assets and carry trades. Journal: International Economic Journal Pages: 365-384 Issue: 2 Volume: 38 Year: 2024 Month: 04 X-DOI: 10.1080/10168737.2024.2320121 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2320121 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:2:p:365-384 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2309353_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Jihye Kam Author-X-Name-First: Jihye Author-X-Name-Last: Kam Author-Name: Soohyung Lee Author-X-Name-First: Soohyung Author-X-Name-Last: Lee Title: Female Representation in Academia: Are Women Underrepresented among Faculty at Public Colleges and Universities? Abstract: There is widespread global attention toward improving female representation in higher education institutions. In 2020, the Educational Official Act was amended to promote gender-conscious academic recruitment in favor of female faculty, who are historically underrepresented in academia, highlighting a notable disparity in female faculty representation between public and private institutions in South Korea. This amendment requires all public colleges and universities to maintain a proportion of female full-time faculty at a level equivalent to that of their private counterparts. Using college-major level information from 2000 to 2022, we examine whether female faculty representation in public institutions lags behind that in private institutions. The estimates show that public institutions generally underperform in recruiting female faculty, but this difference becomes negligible among high-selectivity institutions. It is worth noting that no significant difference is found in female faculty representation between public and private institutions in fields such as computer science, biology, nutrition/food science, medicine/pharmacy, economics/business, other social sciences, and arts/athletics, while the largest gap is observed in the field of education. The results suggest considering college-major specific characteristics when designing and implementing gender-conscious policies and practices to promote women in academia. Journal: International Economic Journal Pages: 185-211 Issue: 2 Volume: 38 Year: 2024 Month: 04 X-DOI: 10.1080/10168737.2024.2309353 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2309353 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:2:p:185-211 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2302817_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240209T083504 git hash: db97ba8e3a Author-Name: Smruti Ranjan Behera Author-X-Name-First: Smruti Ranjan Author-X-Name-Last: Behera Author-Name: Lingaraj Mallick Author-X-Name-First: Lingaraj Author-X-Name-Last: Mallick Author-Name: Tapas Mishra Author-X-Name-First: Tapas Author-X-Name-Last: Mishra Title: The Saving-investment Relationship Revisited: New Evidence from Regime-switching Cointegration Approach Abstract: This paper exploits the regime-switching threshold cointegration approach to elicit the dynamics in the saving-investment relationship and capital mobility in India. Empirical results offer key insights into the threshold cointegration between the saving and investment rates. We find that the adjustment in investment rate in the upper regime is faster than in the lower regime, indicating the higher mobility of capital in the upper regime. Further, results reveal the absence of firm evidence of long-run vs. short-run asymmetries between saving and investment rates. However, results suggest that cumulative positive and negative sums of saving rates affect investment rates. We have made adjustments to cyclical and trend patterns in our data using Hamilton's (2018) filter and have produced robust results with regard to asymmetric cointegration. The posterior estimation results suggest that a downward trend in the saving rates substantially impacts the investment rates, and widening the gap between saving and investment rates facilitates huge mobility of international capital in the long run. Journal: International Economic Journal Pages: 236-269 Issue: 2 Volume: 38 Year: 2024 Month: 04 X-DOI: 10.1080/10168737.2024.2302817 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2302817 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:2:p:236-269 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2372764_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240625T135222 git hash: cf9af5b024 Author-Name: Demet Özocakli Author-X-Name-First: Demet Author-X-Name-Last: Özocakli Author-Name: Berna Doğan Başar Author-X-Name-First: Berna Author-X-Name-Last: Doğan Başar Author-Name: İbrahim Halil Ekşi Author-X-Name-First: İbrahim Halil Author-X-Name-Last: Ekşi Author-Name: William Ginn Author-X-Name-First: William Author-X-Name-Last: Ginn Title: Effect of Grain Corridor Agreement on Grain Prices Abstract: This study investigates the impact of the Grain Corridor Agreement (GCA), particularly in the aftermath of the Russia–Ukraine conflict, on the prices of major grains (wheat, maize, and barley), pivotal for global sustenance. By delineating three significant shocks: the initiation of the conflict, the enforcement of the GCA, and Russia's subsequent withdrawal from it, we employ an Integrated GARCH (IGARCH) model to investigate the impact of the Russia–Ukraine conflict on grain prices. Our empirical findings reveal that all grain prices surged at the onset of the conflict, with barley experiencing the most pronounced increase. Additionally, volatility escalated across all grain prices during the conflict's inception, albeit subsiding upon the implementation of the GCA. Price volatility spiked initially but decreased with the GCA's enforcement. The evidence suggests that the conflict is driving up world grain prices and causing global vulnerability, and that conciliatory policies such as the GCA offer a short-term solution. However, long-term strategies should focus on reducing external dependence by reviewing agricultural policies and promoting domestic production. Moreover, policymakers are advised to consider both domestic and global market vulnerabilities when designing sound policies.Highlights International grain prices (wheat, maize and barley) spiked during the onset of the ongoing Russia–Ukraine conflict.The conflict triggered an international response to resume safe maritime humanitarian transportation of agricultural grains via GCA.We develop an empirical framework to assess the impact of the Russia–Ukraine conflict on grain prices.Empirical findings indicate that Russia–Ukraine conflict increased all grain prices. Journal: International Economic Journal Pages: 489-506 Issue: 3 Volume: 38 Year: 2024 Month: 07 X-DOI: 10.1080/10168737.2024.2372764 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2372764 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:3:p:489-506 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2351993_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240625T135222 git hash: cf9af5b024 Author-Name: Md Iqbal Bhuyan Author-X-Name-First: Md Iqbal Author-X-Name-Last: Bhuyan Author-Name: Keunyeob Oh Author-X-Name-First: Keunyeob Author-X-Name-Last: Oh Title: Effects of Wage Differentials, MFA, and GSP on Exports in the Bangladesh Textile and Garment Industry Abstract: In this paper, we investigate the effect of inter-country wage differentials on textile and garment (T&G) exports of Bangladesh and present an account of the important issue of why textile and garment exports are directed from developing countries to developed countries. Our empirical results imply that the wage differentials between developed and developing countries constitute one of the main drivers of T&G exports. In addition, we checked other factors such as the Multi-Fiber Arrangement (MFA) and the Generalized System of Preferences (GSP) by including dummy variables representing the MFA quota withdrawal and the GSP. We found that removal of the MFA had a significant negative effect, as expected. Our study confirms the positive correlation between GSP and exports. After phasing out the MFA and its quota system, the wage differentials not only boost the T&G exports from Bangladesh, but also increase the effectiveness of GSP. Given such findings, we discuss relevant policy implications. Journal: International Economic Journal Pages: 471-488 Issue: 3 Volume: 38 Year: 2024 Month: 07 X-DOI: 10.1080/10168737.2024.2351993 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2351993 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:3:p:471-488 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2374626_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240625T135222 git hash: cf9af5b024 Author-Name: The Editors Title: Correction Journal: International Economic Journal Pages: (i)-(i) Issue: 3 Volume: 38 Year: 2024 Month: 07 X-DOI: 10.1080/10168737.2024.2374626 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2374626 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:3:p:(i)-(i) Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2378460_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240625T135222 git hash: cf9af5b024 Author-Name: Jie Liu Author-X-Name-First: Jie Author-X-Name-Last: Liu Author-Name: Sung Jin Kang Author-X-Name-First: Sung Jin Author-X-Name-Last: Kang Title: The Impact of Green Innovation on CO2 Emissions in China: Evidence from Spatial Regression Model Abstract: Using data from USPTO, CEADs, the Chinese Statistical Yearbook, and spatial econometric models for the panel of the 30 Chinese provinces for the period 2000∼2019, this study explores and compares the impact of green and non-green innovation on CO2 emissions. The findings reveal a significant spatial correlation in CO2 emissions across provinces, validating the appropriateness of spatial econometric models for this analysis. The results indicate that both green and non-green innovations significantly reduce CO2 emissions, with green innovation having a more pronounced effect despite its lower prevalence. Additionally, patents and their citations notably enhance environmental quality in neighboring provinces through indirect effects. The empirical results highlight that China should focus on: (1) spatial spillover effects of technological, especially green, innovation; (2) removing barriers to green patent invention and citation; (3) transitioning from an energy-driven to a green innovation-driven economy; and (4) enhancing environmental quality by mitigating CO2 emissions. Journal: International Economic Journal Pages: 446-470 Issue: 3 Volume: 38 Year: 2024 Month: 07 X-DOI: 10.1080/10168737.2024.2378460 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2378460 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:3:p:446-470 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2355522_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240625T135222 git hash: cf9af5b024 Author-Name: Tung Nguyen-Thanh Author-X-Name-First: Tung Author-X-Name-Last: Nguyen-Thanh Author-Name: Syed Mansoob Murshed Author-X-Name-First: Syed Mansoob Author-X-Name-Last: Murshed Author-Name: Hoai Nguyen-Trong Author-X-Name-First: Hoai Author-X-Name-Last: Nguyen-Trong Title: External Debts, Re-Election Possibilities and the Infrastructure Development Via Public Private Partnership: Evidence from Low- and Middle-Income Countries Abstract: Public private partnership in infrastructure development can be used as an ‘off the balance' tool to help governments hide real fiscal problems and facilitate the transfer of debt-repayments to their succeeding administrations. Using negative binomial regressions on a panel dataset of 40 low-and middle-income countries from 1992 to 2021, the paper finds that governments which high short-term external debts in stock and flows measurements are more motivated to participate in public private partnership. The results are robust through sensitive tests on different sampled dataset. These findings reaffirm the existence of fiscally opportunistic behaviors of public sectors in public private partnership in low-and middle-income countries. Results also indicate that governments which face re-election limitations have stronger motivations to implement infrastructure projects via public private partnership. These impacts are found to be stronger in less-developed economies and in Sub-Saharan African countries. Journal: International Economic Journal Pages: 426-445 Issue: 3 Volume: 38 Year: 2024 Month: 07 X-DOI: 10.1080/10168737.2024.2355522 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2355522 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:3:p:426-445 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2377590_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240625T135222 git hash: cf9af5b024 Author-Name: Yoonseok Choi Author-X-Name-First: Yoonseok Author-X-Name-Last: Choi Title: Wealth Elasticity, Agent Heterogeneity and Fiscal Dynamics Abstract: The literature on fiscal policy has identified wealth elasticity of labor supply and agent heterogeneity as the linchpin of shaping different transmission mechanisms for fiscal policy. In this paper, I build these two important edifices on an otherwise canonical business-cycle model to conduct quantitative analyses of various fiscal policies. To underscore the relative importance of agent heterogeneity, I compare results from the model with agent heterogeneity with those from a standard model without agent heterogeneity. I also compare results from changes in wealth elasticity to analyze how the model ingredient delivers different macroeconomic and fiscal dynamics. The main finding reveals that in the context of the model formulated in this paper, the capital tax is the least detrimental to business cycles and fiscal states and the consumption tax is the most appropriate policy tool since it yields positive output and tax-revenue multipliers in the short and long runs. All the results from counterfactual experiments suggest that macroeconomic and fiscal outcomes hinge fundamentally on agent heterogeneity and wealth elasticity. An important value that this paper adds to the literature is to offer results from a comprehensive analysis of all possible fiscal policies by considering both essential forces. Journal: International Economic Journal Pages: 385-404 Issue: 3 Volume: 38 Year: 2024 Month: 07 X-DOI: 10.1080/10168737.2024.2377590 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2377590 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:3:p:385-404 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2350386_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240625T135222 git hash: cf9af5b024 Author-Name: Helena Glebocki Keefe Author-X-Name-First: Helena Author-X-Name-Last: Glebocki Keefe Title: Experimenting with Unconventional Monetary Policy: Quantitative Easing in Emerging Markets During Covid-19 Abstract: The Covid-19 Global Health Pandemic introduced a number of economic challenges to countries around the world. Notably, most policymakers implemented greater fiscal spending and monetary stimulus. For the first time, 15 emerging market economies experimented quantitative easing. Most were not constrained by the zero-lower-bound condition, and the degree of financial depth, central bank independence, and central bank transparency varied significantly. This research yields three critical findings. First, emerging markets experienced declines in capital flows and depreciation pressure stemming from quantitative easing. Second, quantitative easing in advanced economies had a more sizable and significant effect than domestic policies. Finally, the degree of financial development and central bank independence are key drivers in how quantitative easing impacts exchange rates specifically. More developed financial systems and greater central bank independence correspond to dampening the effect of quantitative easing on exchange rates. Journal: International Economic Journal Pages: 405-425 Issue: 3 Volume: 38 Year: 2024 Month: 07 X-DOI: 10.1080/10168737.2024.2350386 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2350386 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:3:p:405-425 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2380455_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240625T135222 git hash: cf9af5b024 Author-Name: Ahmed El Khalifi Author-X-Name-First: Ahmed Author-X-Name-Last: El Khalifi Author-Name: Hicham Ouakil Author-X-Name-First: Hicham Author-X-Name-Last: Ouakil Author-Name: José L. Torres Author-X-Name-First: José L. Author-X-Name-Last: Torres Title: Efficiency and Welfare Effects of Fiscal Policy in Emerging Economies: The Case of Morocco Abstract: This paper studies the welfare cost of fiscal policy in developing economies where a significant fraction of the population is government spending-dependent, using as an example Morocco. We develop a Dynamic General Equilibrium model representing an economy populated by three types of households: Standard Ricardian households with access to the financial market, households who supply labor but have no access to the financial market, and non-active government-dependent households (who behave as hand-to-mouth agents). The paper computes welfare changes of different tax rates and alternative spending policies and quantifies the trade-off of fiscal policy across the different groups of agents. We find that: (i) Distortions from some taxes can be positive due to the presence of public inputs; (ii) Output efficiency can be gained by changing the tax mix while keeping constant fiscal revenues; and (iii) Social welfare gains can be obtained by increasing public investment and reducing government consumption and keeping lump-sum transfers constant. Journal: International Economic Journal Pages: 507-530 Issue: 3 Volume: 38 Year: 2024 Month: 07 X-DOI: 10.1080/10168737.2024.2380455 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2380455 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:3:p:507-530 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2358053_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20240625T135222 git hash: cf9af5b024 Author-Name: Yancheng Li Author-X-Name-First: Yancheng Author-X-Name-Last: Li Author-Name: Yilin Li Author-X-Name-First: Yilin Author-X-Name-Last: Li Author-Name: Keunyeob Oh Author-X-Name-First: Keunyeob Author-X-Name-Last: Oh Title: Relationship Between Environmental Regulations and Global Value Chains in Chinese Manufacturing Abstract: While active participation in GVCs can stimulate economic growth, it has also been noted to exacerbate environmental pollution. To address environmental concerns, most countries have strengthened environmental regulations, which in turn may affect the positioning of countries within GVCs. This study empirically analyzes the impact of environmental regulations imposed by the Chinese government on the positioning of the manufacturing sector within GVCs of Chinese manufacturing industries from 2006 to 2018.The findings of the research are as follows: Firstly, the strengthening of environmental regulations has an inverted U-shaped impact on the overall GVC position of Chinese manufacturing sector, demonstrating the combined effects of cost effect and innovation compensation effect. Specifically, when environmental regulations are lower than a certain level, strengthening regulations shifts the GVC position upstream. However, when regulations are more stringent than the level, further strengthening them leads to a downstream shift in GVC position. Secondly, it seems that China's current level of environmental regulation is below the apex of the inverted U-shaped curve, and therefore, it is anticipated that further strengthening of environmental regulations in China will result in a further upstream shift in the GVC position. Thirdly, these analytical results are particularly applicable to technology-intensive industries. Journal: International Economic Journal Pages: 531-550 Issue: 3 Volume: 38 Year: 2024 Month: 07 X-DOI: 10.1080/10168737.2024.2358053 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2358053 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:3:p:531-550 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2418101_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462 Author-Name: Jinill Kim Author-X-Name-First: Jinill Author-X-Name-Last: Kim Title: Variable Capital Utilization and Indeterminacy Abstract: Variable capital utilization has been widely used in business cycle research based on the observation that utilization rate is variable over time. The common assumption is that capital depreciates faster when it is utilized more extensively. This paper shows analytically that variable capital utilization makes it easier for indeterminacy to arise. In particular, when both capital utilization and labor supply become infinitely elastic, the required degree of external increasing returns can be arbitrarily small. Journal: International Economic Journal Pages: 551-563 Issue: 4 Volume: 38 Year: 2024 Month: 10 X-DOI: 10.1080/10168737.2024.2418101 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2418101 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:4:p:551-563 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2393589_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462 Author-Name: Eugene Msizi Buthelezi Author-X-Name-First: Eugene Msizi Author-X-Name-Last: Buthelezi Title: Navigating Global Uncertainty: Examining the Effect of Geopolitical Risks on Cryptocurrency Prices and Volatility in a Markov-Switching Vector Autoregressive Model Abstract: This study addresses a gap in the literature by exploring the impact of geopolitical risk on cryptocurrency markets, particularly Bitcoin, within different price and volatility regimes. We employed generalized autoregressive conditional heteroskedasticity (GARCH) and Markov-Switching Vector Autoregressive (MS-VAR) models on daily data from January 01, 2015 to January 15, 2024. We found evidence suggesting a strong positive relationship between lagged Bitcoin returns and current returns, indicating persistence or momentum in Bitcoin price movements. Additionally, heightened geopolitical risks were associated with decreased current Bitcoin volatility, particularly in state 1 characterized by lower price levels. Conversely, in state 2, which is characterized by higher price levels, geopolitical risk shocks initially spike, followed by a subsequent decrease in Bitcoin price volatility. Furthermore, shock analysis revealed nuanced reactions of Bitcoin prices and volatility to geopolitical events, with distinct patterns observed for different price regimes. Geopolitical risk can explain the variance in Bitcoin prices and volatility in lower-price-level states. These results suggest that adopting dynamic investment approaches that adjust to changing geopolitical conditions and market regimes can help investors navigate cryptocurrency market fluctuations more effectively. Journal: International Economic Journal Pages: 564-590 Issue: 4 Volume: 38 Year: 2024 Month: 10 X-DOI: 10.1080/10168737.2024.2393589 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2393589 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:4:p:564-590 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2420650_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462 Author-Name: Minjung Kim Author-X-Name-First: Minjung Author-X-Name-Last: Kim Title: Effect of Offshoring on Exports of Firms in South Korea Abstract: This study empirically investigates the export-magnification effect of offshoring using a firm-level panel dataset from the manufacturing sector in South Korea. It estimates the impact of offshoring activities on export performance by examining intra-firm and arm’s length offshoring. The empirical evidence demonstrates the export-magnification effect of offshoring on both export market participation and export intensity. Particularly, the export-magnification effect of offshoring still exists among export entrants switching from non-exporters to exporters. Moreover, a greater export-magnification effect from intra-firm offshoring than from arm’s length offshoring is found using instrumental variable (IV) Tobit and probit models. This indicates that the vertical integration of production processes through intra-firm offshoring has a greater effect on export performance than international outsourcing to third parties. Journal: International Economic Journal Pages: 689-700 Issue: 4 Volume: 38 Year: 2024 Month: 10 X-DOI: 10.1080/10168737.2024.2420650 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2420650 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:4:p:689-700 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2401343_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462 Author-Name: Henri Zoungrana Author-X-Name-First: Henri Author-X-Name-Last: Zoungrana Author-Name: Coffie Francis José N’Guessan Author-X-Name-First: Coffie Francis José Author-X-Name-Last: N’Guessan Author-Name: Omer Souglimpo Combary Author-X-Name-First: Omer Souglimpo Author-X-Name-Last: Combary Title: Climate Change's Effect on Household Food Security in Sub-Saharan Africa and Optimal Monetary Policy Abstract: The resurgence of food insecurity in Sub-Saharan Africa during the past decade highlights the need to comprehend the phenomenon within a framework that includes all economic agents in these times of intensification of climate change. Thus, this paper, using a Dynamic Stochastic General Equilibrium (DSGE) model, analyzes the effects of climate shocks occurring in agricultural and non-agricultural sectors on household food security in Sub-Saharan Africa, while determining optimal monetary policy responses to mitigate these adverse effects. Findings highlight that climate shocks affecting the non-agricultural sector are more detrimental to long-term household food security than those affecting the agricultural sector, particularly for urban households. To mitigate these effects, flexible policies targeting food price inflation and headline inflation seem appropriate for rural and urban households, respectively. Nevertheless, in the absence of political and social pressure, flexible headline inflation targeting is optimal for mitigating climate shocks effects on Sub-Saharan Africa's food security. Journal: International Economic Journal Pages: 664-688 Issue: 4 Volume: 38 Year: 2024 Month: 10 X-DOI: 10.1080/10168737.2024.2401343 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2401343 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:4:p:664-688 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2408483_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462 Author-Name: Asiye Tutuncu Author-X-Name-First: Asiye Author-X-Name-Last: Tutuncu Author-Name: Burcu Savas Celik Author-X-Name-First: Burcu Savas Author-X-Name-Last: Celik Author-Name: Sukran Kahveci Author-X-Name-First: Sukran Author-X-Name-Last: Kahveci Title: Do the Political Uncertainty and Geopolitical Risk Indexes in the G-7 Countries Relate to Stock Prices? Fourier Causality Test Evidence Abstract: This study aims to examine the reciprocal effects of the Economic Policy Uncertainty (EPU) and the Geopolitical Risks (GPR) on the stock markets (SP) of the G-7 countries. The findings of the study will allow us to answer the following questions: Do risk and uncertainty conditions in other G-7 countries affect their stock markets as much as those in the country itself? Which affects G-7 stock markets more, EPU or GPR? In addition to previous research in the field, this study conducts a comparative analysis of the effects of the EPU and GPR on the SP of G-7 countries. Therefore, we used the linear VAR Granger, Fourier and Fourier Fractional Frequency Granger Causality tests. We found that the EPU indices of the United States, United Kingdom, and Germany had the greatest impact on the stock markets of their respective countries and other G-7 countries, and the conclusion that G-7 stock markets were influenced by economic uncertainties in other member countries was added to the literature. It has also been found that the G-7 stock markets have a broad influence on the EPU index. Journal: International Economic Journal Pages: 605-630 Issue: 4 Volume: 38 Year: 2024 Month: 10 X-DOI: 10.1080/10168737.2024.2408483 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2408483 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:4:p:605-630 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2421380_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462 Author-Name: Kazunobu Hayakawa Author-X-Name-First: Kazunobu Author-X-Name-Last: Hayakawa Author-Name: Hiroshi Mukunoki Author-X-Name-First: Hiroshi Author-X-Name-Last: Mukunoki Title: Foreseeing Potential Trade Effects of Additive Manufacturing: Evidence from Trade in Sound Recordings Abstract: Additive manufacturing (AM), known as three-dimensional printing, has the potential to drastically change the mode of production and trade in goods. However, it is challenging to investigate the effects of AM on trade because existing AM production patterns are still immature. As an analogy for the impacts of AM, this study investigates the effects of internet distribution on trade in sound recordings, which has changed after the emergence of online shops or streaming services. Specifically, we estimate the gravity equation in the bilateral trade in sound recordings among 197 countries in 2003–2017 and demonstrate that internet penetration significantly decreases trade in sound recordings. Furthermore, the strong protection of intellectual property rights in importing countries weakens the trade-reducing effect, whereas that in exporting countries magnifies such an effect. Journal: International Economic Journal Pages: 591-604 Issue: 4 Volume: 38 Year: 2024 Month: 10 X-DOI: 10.1080/10168737.2024.2421380 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2421380 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:4:p:591-604 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2421376_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462 Author-Name: Yuseob Lee Author-X-Name-First: Yuseob Author-X-Name-Last: Lee Title: Outsourcing Decision and Intra-firm Wage Bargaining Abstract: Firm's outsourcing decision changes the match surplus to be split as well as the rule for splitting the surplus with employees. This study proposes and estimates a simple wage bargaining model that tracks down the time variation of revenue, cost, and input variables while taking the outsourcing patterns as given. The model is examined using a firm-level panel data containing administrative information on income statement and balance sheet provided by the National Tax Service of South Korea. Evidence suggests that outsourcing firms tend to have (i) higher bargaining power against employees, (ii) a larger fixed cost of bargaining failure, and (iii) match surplus more responsive to the cost of purchases. These observed patterns are strong for large-sized firms with 300 or more employees. Journal: International Economic Journal Pages: 631-663 Issue: 4 Volume: 38 Year: 2024 Month: 10 X-DOI: 10.1080/10168737.2024.2421376 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2421376 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:38:y:2024:i:4:p:631-663 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2427630_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462 Author-Name: Brice Kamguia Author-X-Name-First: Brice Author-X-Name-Last: Kamguia Author-Name: Celestin Balla Mekongo Author-X-Name-First: Celestin Balla Author-X-Name-Last: Mekongo Title: Unraveling the Effects of Economic Complexity on Governance in Developing Countries. New Evidence from Instrumental Variable Quantile Regression Estimates Abstract: This study examines the effect of economic complexity on governance indicators. We use instrumental variable quantile regression to estimate a panel data model for 78 developing countries over the period 2000–2019. The results show that there is a positive relationship between economic complexity and overall governance; however, the effect varies according to the distribution of the different governance indicators. More specifically, our results show that economic complexity improves political governance only for the higher quantiles. The effect varies positively along the distribution of economic governance. For institutional governance, the effect of economic complexity is statistically significant for the median and upper quantiles. Our results also allow us to show that the effects of economic complexity on governance differ significantly between quantiles of the distribution in low- and middle-income countries. Finally, human capital, FDI inflows and reductions in income inequality are the channels through which economic complexity affects governance. Journal: International Economic Journal Pages: 83-119 Issue: 1 Volume: 39 Year: 2025 Month: 01 X-DOI: 10.1080/10168737.2024.2427630 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2427630 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:1:p:83-119 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2438019_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462 Author-Name: Boyan Lee Author-X-Name-First: Boyan Author-X-Name-Last: Lee Title: Labour Market Impacts of Renewable Portfolio Standards Abstract: This paper examines how the U.S. Renewable Portfolio Standards (RPS) policy affects the jobs of renewable energy (RE) (solar, hydropower and wind) and conventional energy (CE) (coal and natural gas) industries through panel data. Exploiting the state-level variations in the RPS target rates, this paper also investigates if any spillover effects of the RPS exist from neighbouring states using a fixed-effects vector decomposition model. Findings indicate that an escalation in the RPS target rate increases employment opportunities within the RE sector, while simultaneously causing a decline in employment within the CE sector. Establishing a positive RPS target rate is crucial because the spillover effect from each state has a significantly positive impact. The decision of a state to set its own RPS target plays a crucial role in shaping the level of spillover effects on job creation. Journal: International Economic Journal Pages: 168-198 Issue: 1 Volume: 39 Year: 2025 Month: 01 X-DOI: 10.1080/10168737.2024.2438019 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2438019 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:1:p:168-198 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2430568_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462 Author-Name: Kunhyui Kim Author-X-Name-First: Kunhyui Author-X-Name-Last: Kim Author-Name: Onur Biyik Author-X-Name-First: Onur Author-X-Name-Last: Biyik Title: A Rise in Global Value Chains Participation: Stimulus for the New Goods? Abstract: While the past literature on international trade often dealt with the impact of trade policy such as tariffs, and preferential trade agreements, the current fragmented production network highlights the significance of GVCs. We empirically tested the relationship between GVCs participation and the international trade patterns. The results showed that both backward and forward participation in GVCs have positive relationship with the diversification of goods but negative relationship with the growth of incumbent goods. Journal: International Economic Journal Pages: 120-146 Issue: 1 Volume: 39 Year: 2025 Month: 01 X-DOI: 10.1080/10168737.2024.2430568 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2430568 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:1:p:120-146 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2448621_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462 Author-Name: Tung Nguyen-Thanh Author-X-Name-First: Tung Author-X-Name-Last: Nguyen-Thanh Author-Name: Syed Mansoob Murshed Author-X-Name-First: Syed Mansoob Author-X-Name-Last: Murshed Author-Name: Hoai Nguyen-Trong Author-X-Name-First: Hoai Author-X-Name-Last: Nguyen-Trong Title: Bilateral Trade Agreements Enhance External Debt Markets Accessibility – Empirical Evidence of Vietnam with Synthetic Control Analysis Abstract: International trade integration plays a crucial role in economic growth and governments’ solvency, in the context of emerging markets and developing countries. This paper empirically examines the impacts of joining a free trade agreement with a more developed partner on fiscal capability. Using plausibly causal estimates based on a Synthetic Control Method, the paper finds the Vietnam–Korea Free Trade Agreement helps Vietnam to borrow more from the Republic of Korea. The agreement also helps Vietnam to be less reliant on external borrowing from other international lenders. These results are robust to changing the pool of control countries. The findings echo the literature on the positive role of free trade agreements in enhancing low- and middle-income countries’ capability of external borrowing, especially the lending role of direct partners, which is essential for low- and middle-income countries to necessarily finance growth targets and enhance resilience against global economy’s volatilities. Journal: International Economic Journal Pages: 219-239 Issue: 1 Volume: 39 Year: 2025 Month: 01 X-DOI: 10.1080/10168737.2024.2448621 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2448621 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:1:p:219-239 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2430642_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462 Author-Name: Saroj Dhital Author-X-Name-First: Saroj Author-X-Name-Last: Dhital Title: Time-varying Macro-Financial Linkages across Developed Countries Abstract: The paper examines time-varying linkages between the financial and macroeconomic sectors across 13 developed countries. To do so, the paper studies whether the financial sector is an important source of shock to the macroeconomic sectors across countries. The paper finds evidence of time-varying impacts of the financial shocks on the macroeconomic sectors across countries. There are evidence of time variation in both the transmission and the size of the shocks. Different financial shocks play important roles in different financial shocks. For instance, The US house-price shock plays an important role in the Global Financial Crisis. The model also captures the large degree of heterogeneity in the effect of a financial shock across countries. Journal: International Economic Journal Pages: 47-82 Issue: 1 Volume: 39 Year: 2025 Month: 01 X-DOI: 10.1080/10168737.2024.2430642 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2430642 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:1:p:47-82 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2448617_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462 Author-Name: Mahdieh Khezri-nejad-gharaei Author-X-Name-First: Mahdieh Author-X-Name-Last: Khezri-nejad-gharaei Author-Name: Miquel-Àngel Garcia-López Author-X-Name-First: Miquel-Àngel Author-X-Name-Last: Garcia-López Title: Reverse Causality Between Urbanization and Climate Change Abstract: According to the literature on climate change and urbanization, both urbanization and climate affect each other. Almost all related studies on the relationship between these two main phenomena assume that this relationship is correlated, whereas there is evidence of reverse causality between the main drivers of them. With respect to the importance of the subject, we try to examine this reverse causality and then investigate the effects of urbanization and climate change on each other. Within two different models, the effects of different dimensions of the environment on the urban population and urban energy consumption, and vice versa, are estimated. To work with panel data and the assumption of endogeneity, models are estimated with fixed effects approach. According to the results, the reverse causality between urban population growth and, consequently, urban energy consumption patterns with climate change variables is confirmed using instrumental variables. Moreover, with the same model, the effects of the urban population and urban energy consumption on climate change variables were also estimated. All models show statistical and economic significance, which is proof of taking this reverse causality into account in urban development policies. Journal: International Economic Journal Pages: 1-29 Issue: 1 Volume: 39 Year: 2025 Month: 01 X-DOI: 10.1080/10168737.2024.2448617 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2448617 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:1:p:1-29 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2430650_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462 Author-Name: Soomin Han Author-X-Name-First: Soomin Author-X-Name-Last: Han Title: The Effectiveness of International Knowledge Spillover Channels in Korea Abstract: This study constructs an extensive dataset at the level of the Korean manufacturing industry for the period from 2006 to 2019 to assess the relative effectiveness of knowledge spillover channels on domestic productivity. Unlike previous studies, we consider both embodied and disembodied knowledge channels by analyzing both the aggregated and disaggregated manufacturing sectors. Utilizing a first-difference model, we demonstrate that knowledge spillovers from the inward FDI channel have a strongly positive impact on the productivity growth of domestic manufacturing at both the 1-digit and 2-digit levels. In contrast, while disembodied channels, such as technology imports, do enhance domestic productivity growth, their effect is less pronounced than that of the inward FDI channel. Furthermore, we find that the positive effects of inward FDI vary according to international partners (North America, Asia, and Europe) and the technological intensity of the industry. Specifically, FDI from Europe and inflows into high-technology industries significantly contribute to the diffusion of knowledge spillover effects. These empirical findings provide important policy implications for the Korean government, suggesting the need to encourage and support domestic R&D activities and inward FDI, particularly from Europe and in high-tech industries. Journal: International Economic Journal Pages: 199-218 Issue: 1 Volume: 39 Year: 2025 Month: 01 X-DOI: 10.1080/10168737.2024.2430650 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2430650 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:1:p:199-218 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2448323_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462 Author-Name: Jeonghyun Kim Author-X-Name-First: Jeonghyun Author-X-Name-Last: Kim Author-Name: Byeongseon Seo Author-X-Name-First: Byeongseon Author-X-Name-Last: Seo Title: Effects of Global Value Chain Participation on Economic Growth and Carbon Emissions: A Panel VAR Analysis Abstract: This study explores the effects of forward and backward participation in Global Value Chains (GVCs) on economic growth and carbon emissions, using inter-country input-output (ICIO) data from 1995 to 2018. While prior research has either focused on bivariate relationships or failed to distinguish the distinct impacts of forward and backward GVC participation, this study makes a novel contribution by simultaneously analyzing these variables within a panel vector error correction model (VECM). This approach enables the isolation of directional GVC effects, incorporates long-run equilibrium relationships, and minimizes the potential for intervariable endogeneity. The study yields three key findings. First, we observe a positive long-run relationship between GVC participation and economic growth, irrespective of the direction of participation. Second, evidence of cointegration and dynamic causal relationships is found among GVC participation, economic growth, and carbon emissions. Third, we demonstrate that forward GVC participation has a negative causal effect on carbon emissions, while backward GVC participation is associated with positive causality. These results support the potential for sustainable economic development through GVC participation. Moreover, when countries are classified as environment-friendly or less environment-friendly, our findings indicate that sustainable growth is more achievable in environment-friendly countries. Journal: International Economic Journal Pages: 147-167 Issue: 1 Volume: 39 Year: 2025 Month: 01 X-DOI: 10.1080/10168737.2024.2448323 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2448323 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:1:p:147-167 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2439444_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20241127T073524 git hash: 0fa6686462 Author-Name: Hui Xu Author-X-Name-First: Hui Author-X-Name-Last: Xu Title: Pay for Delay to Prevent Market Entry of a Generic Manufacturer Abstract: The phenomenon of reverse payments, which is common in the pharmaceutical industry, is relatively unpopular in other industries because of antitrust-related legal issues in various countries. In this study, we first examine a basic model with one original and one generic manufacturer, in which the original manufacturer may propose pay for delaying (P4D) entry of the generic manufacturer. We show that the original and generic manufacturers have incentives to engage in P4D, and when doing so, consumer surplus and social welfare always decline. Next, we add another original manufacturer to the basic model. If this manufacturer is a domestic firm, P4D will increase social welfare if drugs are close to homogeneous products and the additional manufacturer is efficient. However, if this manufacturer is a foreign firm, P4D will always reduce social welfare. These results suggest the need to consider whether the drug market is internationalized when deciding whether to regulate P4D. Journal: International Economic Journal Pages: 30-46 Issue: 1 Volume: 39 Year: 2025 Month: 01 X-DOI: 10.1080/10168737.2024.2439444 File-URL: http://hdl.handle.net/10.1080/10168737.2024.2439444 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:1:p:30-46 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2476963_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20250326T224308 git hash: 0183536115 Author-Name: Xiaomin Li Author-X-Name-First: Xiaomin Author-X-Name-Last: Li Author-Name: Kiyoung Jeon Author-X-Name-First: Kiyoung Author-X-Name-Last: Jeon Title: The Impact of Global Value Chain Participation on Inflation: Evidence from Producer Price Index of Korea and China Abstract: This study investigates the influence of global value chain (GVC) participation in the manufacturing sector on inflation in Korea and China. Additionally, it examines the impact of GVC participation on inflation of different manufacturing industries based on technology intensity in both countries. We employ Wang et al. (2017) approach utilizing the ADB MRIO database, with Korea and China as our sample and used the FGLS model to consider the impact of GVC participations on inflation between Korea and China's 15 manufacturing industries from 2007 to 2021. The results indicate that GVC participation and backward participation in Korean manufacturing have a significant positive effect on inflation. In China, GVC participation and backward participation show a significant negative effect on inflation. Furthermore, while the effect of GVC participation on inflation in Korea and China did not show differences by the technology intensity. In Korea, medium–high-tech industries, GVC participation, forward and backward participations have a positive significant effect on inflation. Medium–low-tech industries exhibit a positive impact from GVC and backward participations, while low-tech industries demonstrate a negative effect from GVC, forward, and backward participations on inflation. In China, backward participation in the medium–high-tech and low-tech manufacturing sectors has a significant negative impact on inflation. Journal: International Economic Journal Pages: 341-356 Issue: 2 Volume: 39 Year: 2025 Month: 04 X-DOI: 10.1080/10168737.2025.2476963 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2476963 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:2:p:341-356 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2463372_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20250326T224308 git hash: 0183536115 Author-Name: Ga Woon Ban Author-X-Name-First: Ga Woon Author-X-Name-Last: Ban Author-Name: Hyeran Choi Author-X-Name-First: Hyeran Author-X-Name-Last: Choi Title: Skills and Labor Market Performance in Korea: An International Comparison Perspective Abstract: This study presents an international comparison of relations between skills and labor market performance. Human capital theory emphasizes that skills have a positive effect on labor market performance, which is evident in most countries. However, skill levels do not have a positive impact on employability and wage in South Korea, unlike other OECD countries. Using data from the Programme for the International Assessment of Adult Competencies (PIAAC), we analyze how various skill dimensions influence employment outcomes and wage levels. The skills measured in PIAAC are plausible values. Therefore, our methodology entails estimating regression coefficients and presenting the final estimates as the averages of these coefficients. Standard errors are computed through repeated sampling using the jackknife technique. The findings of this study indicate that policies focusing solely on the supply side of skills, such as expanding education and training, may have a limited impact on improving employment and wages in Korean labor market. While human capital investment remains crucial for labor market outcomes, the results suggest that Korea could achieve greater effectiveness by complementing these efforts with workplace innovation policies aimed at increasing the demand for skills. Journal: International Economic Journal Pages: 357-382 Issue: 2 Volume: 39 Year: 2025 Month: 04 X-DOI: 10.1080/10168737.2025.2463372 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2463372 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:2:p:357-382 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2459146_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20250326T224308 git hash: 0183536115 Author-Name: Faïçal Lakhchen Author-X-Name-First: Faïçal Author-X-Name-Last: Lakhchen Title: Financial Frictions and Monetary Policy in Developing Economies: An Estimated DSGE Model with a Banking Sector for Morocco Abstract: This paper examines how the presence of financial frictions in the banking sector amplify business cycle fluctuations in developing economies and the role of monetary policy in mitigating these fluctuations. Using a New Keynesian DSGE model, we compare versions with and without financial frictions. The model with frictions fits the data better and shows that these frictions magnify the impact of capital quality shocks, causing deeper and more prolonged downturns. We also explore implications for monetary policy, comparing standard inflation-targeting rules with those that include financial stability objectives. Results show that incorporating credit stabilization reduces volatility in inflation, output, and credit. These findings highlight the need for policies that account for financial frictions to better manage economic stability in developing economies. Journal: International Economic Journal Pages: 400-422 Issue: 2 Volume: 39 Year: 2025 Month: 04 X-DOI: 10.1080/10168737.2025.2459146 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2459146 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:2:p:400-422 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2483321_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20250326T224308 git hash: 0183536115 Author-Name: Jae Eun Shin Author-X-Name-First: Jae Eun Author-X-Name-Last: Shin Author-Name: Eun Young Kim Author-X-Name-First: Eun Young Author-X-Name-Last: Kim Author-Name: Yong-Gun Kim Author-X-Name-First: Yong-Gun Author-X-Name-Last: Kim Title: Discrepancies in Carbon Emissions Accounting for Korea’s Steel Industry: A Comparative Analysis of GTAP and OECD ICIO Databases Abstract: The European Union’s Carbon Border Adjustment Mechanism (CBAM) underscores the need for accurate carbon emissions assessment, particularly for Korea’s steel sector, which faces high exposure due to its emissions intensity. This study compares emissions estimates from two widely used multi-regional input-output databases – GTAP and OECD ICIO – revealing significant discrepancies across scopes 1, 2, and 3 emissions. Methodological differences, particularly in the treatment of self-generated electricity and fossil fuel use, result in substantial variations, with GTAP estimating scope 1 emissions to be 70% lower than ICIO, while scope 2 emissions also show a notable 44% difference. These discrepancies impact CBAM cost estimations, industrial decision-making, and macroeconomic assessments, raising concerns about potential distortions in carbon pricing policies. Addressing these inconsistencies requires harmonized carbon accounting frameworks to ensure fairer CBAM implementation and more accurate policy assessments. Standardized emissions reporting, improved data accuracy, and international collaboration are critical to minimizing economic distortions and supporting the transition toward low-carbon industrial strategies. Journal: International Economic Journal Pages: 383-399 Issue: 2 Volume: 39 Year: 2025 Month: 04 X-DOI: 10.1080/10168737.2025.2483321 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2483321 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:2:p:383-399 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2467897_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20250326T224308 git hash: 0183536115 Author-Name: Atsuko Izumi Author-X-Name-First: Atsuko Author-X-Name-Last: Izumi Author-Name: Hyeog Ug Kwon Author-X-Name-First: Hyeog Ug Author-X-Name-Last: Kwon Title: The Effects of Board Independence on Forced CEO Turnovers: Evidence from a US-Japan Comparison Abstract: We hypothesize that the desire of insider board members to keep their employment impedes corporate performance recovery and asset restructuring after CEO replacement. Using forced CEO turnover events from 2000 to 2007 in the United States and Japan, we show that ROA and stock performance improve after forced CEO turnovers only in the United States, where boards are highly independent, but not in Japan, where boards are insider-dominated. We also find that asset restructuring and labor force reduction are up to seventeen times larger in the United States than in Japan. The subsample analysis for the United State confirms that post-turnover corporate outcomes are driven by board independence. Journal: International Economic Journal Pages: 315-340 Issue: 2 Volume: 39 Year: 2025 Month: 04 X-DOI: 10.1080/10168737.2025.2467897 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2467897 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:2:p:315-340 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2481624_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20250326T224308 git hash: 0183536115 Author-Name: Fernando Barros Jr. Author-X-Name-First: Fernando Author-X-Name-Last: Barros Jr. Author-Name: William Leite Author-X-Name-First: William Author-X-Name-Last: Leite Author-Name: Marcos Ribeiro Author-X-Name-First: Marcos Author-X-Name-Last: Ribeiro Title: Non-linear Incentives and Intertemporal Consistency in Inflation Targeting Regimes Abstract: This paper examines the institutional setup of an inflation targeting system where the Central Bank determines the target. Building on Walsh (1995, Optimal contracts for central bankers. The American Economic Review, 150–167), we show that, unlike the traditional solution, the incentive contract that induces an intertemporally consistent solution is not linear and may depend on the level of inflation or the deviation from the announced target to punish the Central Bank. Journal: International Economic Journal Pages: 264-273 Issue: 2 Volume: 39 Year: 2025 Month: 04 X-DOI: 10.1080/10168737.2025.2481624 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2481624 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:2:p:264-273 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2455738_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20250326T224308 git hash: 0183536115 Author-Name: Halit Yanikkaya Author-X-Name-First: Halit Author-X-Name-Last: Yanikkaya Author-Name: Abdullah Altun Author-X-Name-First: Abdullah Author-X-Name-Last: Altun Author-Name: Pınar Tat Author-X-Name-First: Pınar Author-X-Name-Last: Tat Title: The Determinants of Greenhouse Gas Emissions Intensity in Global Value Chains1 Abstract: This paper tracks the greenhouse gas emissions intensity embedded in global value chains observing 186 countries from 1990 to 2015 and then looks at the determinants of emissions intensity considering both country and sector-level variables in a gravity-like framework. Our graphical visualization displays that as expectedly, developed countries appear to be both major GHG emissions producers and outsourcers in the highly fragmented world. Indeed, China, the USA, Germany, Japan, and Russia are the top five countries in terms of greenhouse gas emission intensities embedded in trade flows. Moreover, our empirical results reveal that while higher capital stock is attributable to higher greenhouse gas emissions intensity embedded in GVCs, the renewable energy consumption of sectors can be seen as an emissions intensity-decreasing factor. While higher income levels seems to deteriorate environmental quality, regional or global integration in trade agreements seems to be consistent with the current increasing efforts and concerns regarding environmental issues. Given the current trajectory and the findings of this article; encouraging renewable energy usage in the production process, monitoring detrimental trade and production activities, and cost-sharing plans between exporters and importers should be carefully considered to decrease GHG emissions intensities. Journal: International Economic Journal Pages: 241-263 Issue: 2 Volume: 39 Year: 2025 Month: 04 X-DOI: 10.1080/10168737.2025.2455738 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2455738 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:2:p:241-263 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2456156_J.xml processed with: repec_from_jats12.xsl darts-xml-transformations-20250326T224308 git hash: 0183536115 Author-Name: Nguyen Doan Author-X-Name-First: Nguyen Author-X-Name-Last: Doan Author-Name: Canh Phuc Nguyen Author-X-Name-First: Canh Author-X-Name-Last: Phuc Nguyen Author-Name: Binh Quang Nguyen Author-X-Name-First: Binh Author-X-Name-Last: Quang Nguyen Title: How e-Government Affects the Shadow Economy: A Further Analysis Abstract: This study re-examines the influence of e-government development on the shadow economy. Empirical analysis is carried out for a sample of 148 countries from 2003 to 2020. First, the negative effects of e-government on the size of the shadow economy as a percentage of GDP are re-affirmed across the globe. Second, telecommunication infrastructure is likely the main factor explaining how e-government affects the shadow economy. Third, the negative effects of e-government are less in countries with high economic uncertainty, large government size, or a greater portion of the services sector, while there is statistically insignificant evidence that e-government might have a greater negative effect in countries with a socialist history, a civil law system, one major religion, or a strong state history. Fourth, panel autoregressive distributed lag estimates show that e-government may increase the shadow economy in the short term, but it reduces the shadow economy significantly in the long term. Fifth, e-government increases the absolute value of the shadow economy. The findings suggest that e-government adoption might provide benefits for both the official and unofficial economies, although the benefits for the official economy outperform those for the unofficial economy, particularly in the long run. Journal: International Economic Journal Pages: 274-314 Issue: 2 Volume: 39 Year: 2025 Month: 04 X-DOI: 10.1080/10168737.2025.2456156 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2456156 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:2:p:274-314 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2484759_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250421T155847 git hash: 93a7646670 Author-Name: Kazeem Bello Ajide Author-X-Name-First: Kazeem Bello Author-X-Name-Last: Ajide Title: Do Terrorist Attacks Deter Foreign Investors from Entering African Markets? Abstract: This study examines the impact of rising terrorist activities on Foreign Direct Investment (FDI) across 41 African economies from 1980 to 2020. Using a two-step dynamic Generalized Method of Moments (GMM) approach, the findings reveal a persistent negative relationship between terrorist attacks – including non-fatal injuries, fatalities, and attack severity – and FDI inflows. Notably, the severity of incidents amplifies this adverse effect, with more severe attacks leading to sharper declines in FDI. While most terrorist tactics significantly deter FDI, exceptions exist, such as unarmed assaults and assassinations. However, suicidal attacks exert a particularly pronounced negative impact. Additionally, various economic and developmental factors, such as GDP growth, trade openness, and infrastructure quality, influence FDI patterns. Overall, the study highlights the urgent need to combat terrorism to enhance FDI attraction. Establishing a secure and stable investment climate is crucial for sustaining FDI inflows and fostering economic growth across African nations. Journal: International Economic Journal Pages: 531-567 Issue: 3 Volume: 39 Year: 2025 Month: 07 X-DOI: 10.1080/10168737.2025.2484759 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2484759 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:3:p:531-567 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2491386_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250421T155847 git hash: 93a7646670 Author-Name: Gan-Ochir Doojav Author-X-Name-First: Gan-Ochir Author-X-Name-Last: Doojav Author-Name: Batbold Narmandakh Author-X-Name-First: Batbold Author-X-Name-Last: Narmandakh Title: Forecasting Inflation in Mongolia Using Machine Learning Abstract: This paper explores the significance of machine learning (ML) techniques in forecasting inflation and identifying its drivers in Mongolia, a commodity-dependent developing economy. ML methods are handy in dealing with a large database and specify flexible relationships among variables. Our empirical work resulted in several novel findings. First, we present that ML methods (XGBoost, Random forest and Ridge regression) with large datasets can produce more accurate forecasts than the standard benchmarks, particularly for longer forecast horizons. The dominance of XGBoost and Random forest longer forecast horizons indicates the existence of nonlinearities in the inflation dynamics, relevant to forecasting inflation. Second, the performance of the factor-augmented autoregressive (FAAR) model depends on the approach used in identifying the optimal number of factors. Third, the best predictors of inflation change considerably over forecast horizons. Supply factors are the best performers in predicting inflation for short-horizon, while demand-side factors are the most important factors for longer forecast horizons. Fourth, the selection of variables is quite similar across the ML methods. Journal: International Economic Journal Pages: 568-590 Issue: 3 Volume: 39 Year: 2025 Month: 07 X-DOI: 10.1080/10168737.2025.2491386 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2491386 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:3:p:568-590 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2520314_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250421T155847 git hash: 93a7646670 Author-Name: Minho Lee Author-X-Name-First: Minho Author-X-Name-Last: Lee Author-Name: Chang Sik Kim Author-X-Name-First: Chang Sik Author-X-Name-Last: Kim Title: Forecasting Crude Oil Prices with a Structural Machine Learning Model Abstract: This study proposes a structural machine learning methodology that integrates both linear and nonlinear relationships for crude oil price forecasting. By employing a partially linear machine learning model that explicitly captures the linear effects of key variables influencing crude oil prices, the approach enhances interpretability while evaluating predictive performance. In addition, this study investigates the impact of hyperparameter selection on forecasting accuracy, with a particular emphasis on subsampling and random seed effects–factors that have received limited attention in existing empirical research. Subsampling is actively utilized as a hyperparameter to explore variations in predictive performance, and instead of relying on a single fixed random seed, multiple seeds are used to assess the model's stability and robustness. Based on monthly forecasting experiments spanning approximately 11 years, the results demonstrate that the partially linear machine learning model, when optimized through appropriate subsampling and hyperparameter tuning, outperforms benchmark models in one- to three-step-ahead forecasts. Furthermore, an analysis of prediction error distributions across different random seeds confirms the robustness of the model's predictive performance. Journal: International Economic Journal Pages: 423-445 Issue: 3 Volume: 39 Year: 2025 Month: 07 X-DOI: 10.1080/10168737.2025.2520314 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2520314 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:3:p:423-445 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2518951_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250421T155847 git hash: 93a7646670 Author-Name: Sanho Lim Author-X-Name-First: Sanho Author-X-Name-Last: Lim Author-Name: Kyounghun Kim Author-X-Name-First: Kyounghun Author-X-Name-Last: Kim Title: The Effects of Risk-Hedging Motives and Trade Costs on Foreign Bond Holdings Abstract: This study investigates the determinants of foreign bond holdings, focusing on the hedge motive against real exchange rate risk and trade costs. Unlike previous studies, this paper analyzes the effects of the hedge ratio and trade costs on foreign bond holdings within both empirical analysis and a unified analytical framework. To achieve this, we conduct a panel regression analysis, which provides empirical evidence that increases in the hedge ratio and trade costs reduce U.S. foreign bond holding. On the theoretical side, we derive a closed-form solution for foreign bond holdings with respect to trade costs and the hedge ratio using a second-order approximation within a dynamic stochastic general equilibrium (DSGE) framework. Simulation results reveal that the hedge ratio and trade costs negatively affect foreign bond holdings under certain model parameters, consistent with empirical findings. These results suggest that home-country investors place greater weight on domestic bonds than on foreign bonds, as a higher hedge ratio implies that domestic bonds are more effective in hedging real exchange rate risks. In addition, the results indicate that active trade in goods can promote bond market integration across countries by reducing asymmetric information between trading partners. Journal: International Economic Journal Pages: 513-530 Issue: 3 Volume: 39 Year: 2025 Month: 07 X-DOI: 10.1080/10168737.2025.2518951 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2518951 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:3:p:513-530 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2518947_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250421T155847 git hash: 93a7646670 Author-Name: William Ginn Author-X-Name-First: William Author-X-Name-Last: Ginn Author-Name: Jamel Saadaoui Author-X-Name-First: Jamel Author-X-Name-Last: Saadaoui Title: Impact of Geopolitical Risks on Equity Returns Abstract: This study analyzes the effects of local and global geopolitical risks (GPR) on real equity returns. Using a panel and country-specific local projections (LP) model, we analyze the impact of local and global GPR shocks, where the latter is further decomposed into aggregate risks, threats, and actions. Our findings reveal that both local and global GPR shocks negatively impact real equity returns at the onset, with global shocks generally exerting a stronger influence. While threats tend to have a more pronounced negative effect compared to actions, we observe heterogeneous responses on financial markets to different types of geopolitical risks, we find that actions have greater potency in economies exposed to higher levels of local GPR due to recurring conflicts and geopolitical tensions. Journal: International Economic Journal Pages: 446-466 Issue: 3 Volume: 39 Year: 2025 Month: 07 X-DOI: 10.1080/10168737.2025.2518947 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2518947 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:3:p:446-466 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2491392_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250421T155847 git hash: 93a7646670 Author-Name: Oasis Kodila-Tedika Author-X-Name-First: Oasis Author-X-Name-Last: Kodila-Tedika Author-Name: Sherif Khalifa Author-X-Name-First: Sherif Author-X-Name-Last: Khalifa Author-Name: Christian Otchia Author-X-Name-First: Christian Author-X-Name-Last: Otchia Title: Leader's Education and Land Reform Enactments Abstract: This paper examines whether the gap between the educational attainment of the country's leader and the population affects the implementation of land reforms. We combine an unbalanced panel of the educational distance and the enactment of land reforms from 1900–2010 to test our hypothesis. The analysis confirms our intuition and shows a statistically significant negative effect of educational distance on the probability of the full implementation of reforms in a Multinomial Logistic regression. The sensitivity analysis confirms the robustness of our results after the inclusion of other control variables and using alternative estimation techniques such as Ordinary Least Squares, Ordered Probit, and Logit. To deal with potential endogeneity, we use instrumental variables that indicate the distinct colonial educational policies. The Two Stage Least Squares estimation results confirm our findings. Journal: International Economic Journal Pages: 497-512 Issue: 3 Volume: 39 Year: 2025 Month: 07 X-DOI: 10.1080/10168737.2025.2491392 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2491392 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:3:p:497-512 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2530405_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250421T155847 git hash: 93a7646670 Author-Name: Takaaki Takahashi Author-X-Name-First: Takaaki Author-X-Name-Last: Takahashi Title: The Effects of the Increase in Tourists on the Varieties of Goods and Services Provided Abstract: The increase in tourists may enlarge the range of varieties consumed by tourists and instead reduce that by local residents. We obtain a general condition for this variety-shifting effect occurring and derive some welfare implications. In addition, we examine whether the effect emerges in the models with two specific types of preference, the model with the CES utility function and that with the quasi-linear utility function augmented by quadratic subutility. Journal: International Economic Journal Pages: 467-496 Issue: 3 Volume: 39 Year: 2025 Month: 07 X-DOI: 10.1080/10168737.2025.2530405 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2530405 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:3:p:467-496 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2580937_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250815T221317 git hash: a1bee4f0b5 Author-Name: Dongwan Choo Author-X-Name-First: Dongwan Author-X-Name-Last: Choo Author-Name: Joongsan Ko Author-X-Name-First: Joongsan Author-X-Name-Last: Ko Title: Income Risk Sharing Between Korea and Its Regional Partners: Evidence from International Factor Income Flows Abstract: This paper investigates the extent to which Korea shares income risk with its major regional partners through cross-border factor income flows. Using a dataset spanning 1998–2023, disaggregated by income type and partner region, we quantify Korea’s international income risk-sharing performance with eight global regions. Employing a bilateral income risk-sharing framework, we find that Korea achieves modest but statistically significant income smoothing through primary income inflows – particularly investment income – from Southeast Asia (SEA) and the European Union. Among income components, dividend receipts from SEA are the most effective in mitigating idiosyncratic output shocks. In contrast, primary income outflows – especially interest payments to the United States – amplify output volatility, leading to significant income dis-smoothing. These results highlight the heterogeneous nature of Korea’s financial linkages and underscore the importance of diversifying investment flows toward regions offering stronger countercyclical income, thereby enhancing macroeconomic resilience. Journal: International Economic Journal Pages: 776-801 Issue: 4 Volume: 39 Year: 2025 Month: 10 X-DOI: 10.1080/10168737.2025.2580937 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2580937 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:4:p:776-801 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2575179_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250815T221317 git hash: a1bee4f0b5 Author-Name: Jihye Kam Author-X-Name-First: Jihye Author-X-Name-Last: Kam Title: Does Faculty Gender Composition Matter for Retaining Students in Their Major After College Graduation?* Abstract: There is a widely held belief that female faculty serve as valuable role models for female students, yet prior research reports mixed effects on academic and labor market outcomes. This study examines whether the proportion of female faculty within undergraduate major programs influences graduates’ likelihood of remaining in their field – through either postgraduate study or field-related employment – using nationally representative data from South Korea. Results indicate that a higher female faculty share is associated with a lower probability of pursuing graduate education for both men and women. However, female faculty representation significantly increases the likelihood that women, but not men, remain in their undergraduate field. Effects are highly discipline-specific, with positive associations in education, engineering, and biology/food science, but negative ones in medicine/pharmacy. These findings suggest that female faculty can strengthen women’s post-graduation field alignment, yet the influence varies substantially across disciplines. The results highlight the need for field-targeted policies to promote gender equity in academia, recognizing that the role-model effect may be context-dependent and, in some cases, countervailing. Journal: International Economic Journal Pages: 676-719 Issue: 4 Volume: 39 Year: 2025 Month: 10 X-DOI: 10.1080/10168737.2025.2575179 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2575179 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:4:p:676-719 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2561629_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250815T221317 git hash: a1bee4f0b5 Author-Name: Bisma Raina Author-X-Name-First: Bisma Author-X-Name-Last: Raina Author-Name: Samaresh Bardhan Author-X-Name-First: Samaresh Author-X-Name-Last: Bardhan Title: Dynamic Interactions of Geopolitical Risk, Economic Policy Uncertainty and Market Volatility with Stock and Commodity Markets: Evidence from India Abstract: This study examines the dynamic interactions of Geopolitical Risk (GPR), Economic Policy Uncertainty (EPU), and the Volatility Index (VIX), with financial and commodity markets in India by incorporating both global and India-specific GPR measures, alongside EPU-India and India-VIX indices. Using the wavelet coherence and DCC-GARCH (1,1) models on monthly data from January 2000 to December 2023, the study investigates co-movements and lead-lag relationships between uncertainty indicators and stock markets, precious metals, and crude oil. Findings reveal that the effects of uncertainty shocks on stock and commodity markets are time-varying and frequency dependent. Among the uncertainty measures, India-VIX and EPU-India exert strong, persistent negative effects on the BSE-500 over medium and long-term horizons. India-GPR exhibits mostly positive, short-lived co-movements with the BSE-500, while World-GPR linkages remain weak. Unlike silver, gold demonstrates robust hedging properties against India-VIX, while its co-movements with EPU-India and GPR are asymmetric and event-specific. Crude oil displays positive long-term co-movements with GPR and persistent negative patterns with EPU-India and India-VIX. Findings seem to be relevant to investors while designing portfolios and risk management strategies, and to the policy makers as well while framing appropriate policies in anticipating market reactions and forming market expectations, respectively. Journal: International Economic Journal Pages: 720-755 Issue: 4 Volume: 39 Year: 2025 Month: 10 X-DOI: 10.1080/10168737.2025.2561629 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2561629 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:4:p:720-755 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2543093_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250815T221317 git hash: a1bee4f0b5 Author-Name: Jinshuo Qu Author-X-Name-First: Jinshuo Author-X-Name-Last: Qu Title: Privatization, Strategic Foreign Direct Investment and Welfare under Technology Diffusion Abstract: This study examines the interaction between privatization and foreign direct investment (FDI) in a mixed oligopoly characterized by international competition and technology diffusion. We develop a three-stage game-theoretic model where a domestic state-owned enterprise (SOE) competes with multiple technologically advanced foreign firms. The foreign firms enter the domestic market through either FDI or exports, with FDI generating technology spillovers to the domestic SOE. The analysis demonstrates that privatization enhances foreign firms’ incentives to undertake FDI, while partial privatization maximizes domestic welfare under both entry modes. The endogenous location choices of foreign firms impose constraints on the privatization policies. Although FDI generally yields higher welfare than exports, the government may over-privatize to induce FDI or refrain from privatization when the required degree of privatization is excessive. Therefore, the equilibrium privatization policy may deviate from the first-best outcome due to foreign firms’ strategic location choices. Journal: International Economic Journal Pages: 609-628 Issue: 4 Volume: 39 Year: 2025 Month: 10 X-DOI: 10.1080/10168737.2025.2543093 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2543093 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:4:p:609-628 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2532597_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250815T221317 git hash: a1bee4f0b5 Author-Name: Hakan Yilmazkuday Author-X-Name-First: Hakan Author-X-Name-Last: Yilmazkuday Title: Real Exchange Rate Volatility and Economic Growth Abstract: This paper investigates the effects of real exchange rate volatilities on economic growth for a balanced annual panel of 61 countries using the local projections method. The empirical results suggest that a unit shock to the real exchange rate volatility reduces economic growth by up to 0.35% after two years. When different economic conditions are considered, shocks to real exchange rate volatility reduce economic growth only during periods of negative economic growth rates and high real exchange rate volatilities. Additional estimations distinguishing between different country groups further show that these empirical results are mostly driven by emerging markets and developing countries, whereas the effects for advanced countries are statistically insignificant. Important policy suggestions follow. Journal: International Economic Journal Pages: 591-608 Issue: 4 Volume: 39 Year: 2025 Month: 10 X-DOI: 10.1080/10168737.2025.2532597 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2532597 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:4:p:591-608 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2566682_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250815T221317 git hash: a1bee4f0b5 Author-Name: Emmanuel Attobrah Author-X-Name-First: Emmanuel Author-X-Name-Last: Attobrah Author-Name: Joshua Sebu Author-X-Name-First: Joshua Author-X-Name-Last: Sebu Author-Name: Francis Kwaw Andoh Author-X-Name-First: Francis Kwaw Author-X-Name-Last: Andoh Author-Name: Emmanuel Ekow Asmah Author-X-Name-First: Emmanuel Author-X-Name-Last: Ekow Asmah Author-Name: Ewura-Adwoa Ewusie Author-X-Name-First: Ewura-Adwoa Author-X-Name-Last: Ewusie Title: Household Debt Servicing and Multidimensional Poverty in Ghana Abstract: This study investigates the effect of household debt servicing on multidimensional poverty in Ghana using data from the Ghana Living Standards Survey (GLSS7). The objectives were to examine the effect of debt servicing, explore heterogeneity across gender and location of household heads, and identify a threshold beyond which debt servicing become welfare-reducing. Using IV-GMM, quantile regression, and threshold models, the results consistently show that debt servicing exacerbates multidimensional poverty. The IV-GMM estimates indicate that a 1% increase in debt servicing raises multidimensional poverty by 0.00113 points. This reveals that households would require 11.26% increase in income (GH6,210) to offset this effect. Male-headed and rural households face stronger adverse impacts than female-headed and urban households, while quantile regressions show that the poorest households bear the greatest burden. Threshold analysis identifies 23% of net income as a critical tipping point: below it, debt servicing reduces poverty, but above it, a 1% increase in debt servicing raises poverty by 0.0959 points. This suggests that offsetting this threshold effect would require 959% income increase (GH574,243). We therefore recommend that the Ministry of Finance should strengthen financial inclusion initiatives with safeguards that prevent over-indebtedness, particularly among vulnerable households. Journal: International Economic Journal Pages: 756-775 Issue: 4 Volume: 39 Year: 2025 Month: 10 X-DOI: 10.1080/10168737.2025.2566682 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2566682 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:4:p:756-775 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2543585_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250815T221317 git hash: a1bee4f0b5 Author-Name: Japan Huynh Author-X-Name-First: Japan Author-X-Name-Last: Huynh Title: Bank Earnings Opacity: Does Digital Transformation Matter? Abstract: This paper explores the effects of digital transformation on bank earnings opacity using a panel dataset of Vietnamese commercial banks from 2008 to 2022. Our findings reveal that overall digital transformation and its components significantly reduce the magnitude of discretionary loan loss provisions, highlighting the role of digitalization in curbing bank earnings opacity, particularly income-increasing management practices. Mechanism tests indicate that this reduction is mediated by increased profitability and enhanced market power of banks, which are outcomes of digital transformation. Additionally, our heterogeneity analysis shows that the impact of digital transformation on reducing earnings opacity is less pronounced in banks with greater financial strength and higher market positions, such as those with larger capital reserves, higher liquidity, lower credit risk, state ownership, and listing status. Our findings underscore the significance of promoting digital transformation across the banking sector, with a particular focus on supporting weaker banks to enhance financial transparency. Journal: International Economic Journal Pages: 629-650 Issue: 4 Volume: 39 Year: 2025 Month: 10 X-DOI: 10.1080/10168737.2025.2543585 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2543585 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:4:p:629-650 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2553094_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250815T221317 git hash: a1bee4f0b5 Author-Name: Xubiao He Author-X-Name-First: Xubiao Author-X-Name-Last: He Author-Name: Meiyu Huang Author-X-Name-First: Meiyu Author-X-Name-Last: Huang Author-Name: Dongming Jiang Author-X-Name-First: Dongming Author-X-Name-Last: Jiang Title: Asymmetric Tail Risk Spillovers between Stock and Bitcoin Markets: A TGARCH-Based GCIR Approach Abstract: This paper presents a novel examination of asymmetric tail risk spillovers between stock and Bitcoin markets, combining TGARCH and Granger causality in risk approach. We investigate the causal relationships between downside and upside risks of Bitcoin and eight stock markets, which include indices from G7 countries and China. Our analysis of down-to-up spillover effects reveals a unidirectional causality from stock markets to Bitcoin (gold). Additionally, cross-market correlation analysis indicates that extreme downturns in stock markets significantly trigger uptrends in Bitcoin, illustrating a ‘flight-to-quality’ phenomenon. Furthermore, the findings suggest that G7 countries exhibit notably enhanced short-term asymmetric dynamic spillover effects with Bitcoin compared to the Chinese stock market, particularly under the influence of pandemic factors. In a broader context, while gold remains a stable safe haven, Bitcoin emerges as a short-term hedge asset in certain countries and specific periods, countering extreme downturns in the stock market. Journal: International Economic Journal Pages: 651-675 Issue: 4 Volume: 39 Year: 2025 Month: 10 X-DOI: 10.1080/10168737.2025.2553094 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2553094 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:39:y:2025:i:4:p:651-675 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2598206_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250815T221317 git hash: a1bee4f0b5 Author-Name: Jihye Ahn Author-X-Name-First: Jihye Author-X-Name-Last: Ahn Title: Comparing U.S. Monetary Policy Effectiveness in the Pre- and Post-Pandemic Periods Abstract: This study investigates structural changes in U.S. monetary policy effectiveness before and after the COVID-19 pandemic by analyzing the dynamic responses of key macroeconomic variables – personal consumption expenditures, industrial production, long-term interest rate, and the shadow short rate (SSR) – to monetary policy shocks using local projection methods, over the period from January 2016 to August 2025. This study reveals that in the pre-pandemic period, before March 2020, contractionary monetary policy shocks lead to conventional and statistically significant effects: declines in inflation rate and output growth, and temporary increases in long-term interest rates, reflecting effective monetary policy. In the post-pandemic period, after March 2020, responses are muted and largely statistically insignificant, indicating a weakened monetary policy effectiveness. Furthermore, counterfactual simulations that remove monetary policy shocks after March 2020 confirm that monetary policy continues to support real activity and financial conditions. Overall, the findings highlight structural changes in the U.S. monetary policy effectiveness under unpredictable economic circumstances. Journal: International Economic Journal Pages: 46-56 Issue: 1 Volume: 40 Year: 2026 Month: 01 X-DOI: 10.1080/10168737.2025.2598206 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2598206 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:40:y:2026:i:1:p:46-56 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2608351_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250815T221317 git hash: a1bee4f0b5 Author-Name: Xiaolin Yu Author-X-Name-First: Xiaolin Author-X-Name-Last: Yu Author-Name: Jin Seo Cho Author-X-Name-First: Jin Seo Author-X-Name-Last: Cho Title: Fintech Pilot Programs and Digital Innovation: Evidence from Quasi-Natural Experiments in China Abstract: The current study examines whether government-led digital finance initiatives promote firm-level digital innovation by leveraging the staggered rollout of China's Fintech pilot programs as quasi-natural experiments. Our dataset comprises 26,746 firm-year observations of A-share listed companies from 2009 to 2023. To measure innovation, we develop a text-based indicator derived from the frequency of digital-related keywords in the annual reports of the listed firms. Employing a multi-period difference-in-differences design, we find that designation as a pilot zone increases digital innovation intensity by 0.8225 per thousand report words. These results remain robust across parallel, propensity score matching, placebo, and robustness tests. Mediation analysis reveals that the part of the effect is attributable to increased R&D intensity, with the program raising the average R&D-to-sales ratio by 0.24 percentage points. Moreover, program effect is stronger among high-tech firms and those located in Central and Western China, regions characterized by relatively weaker financial and digital infrastructure. Journal: International Economic Journal Pages: 135-163 Issue: 1 Volume: 40 Year: 2026 Month: 01 X-DOI: 10.1080/10168737.2025.2608351 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2608351 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:40:y:2026:i:1:p:135-163 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2584139_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250815T221317 git hash: a1bee4f0b5 Author-Name: Sun Kyung Huh Author-X-Name-First: Sun Kyung Author-X-Name-Last: Huh Author-Name: Byeongseon Seo Author-X-Name-First: Byeongseon Author-X-Name-Last: Seo Title: Effects of Environmental Technical Barriers to Trade on Trade Performance: A Panel VAR Assessment Abstract: Environmental Technical Barriers to Trade (TBTs), including climate change-related regulations, standards, and conformity assessments, have emerged as increasingly influential non-tariff measures in international trade. This paper quantifies the impact of environmental TBT on trade performance using a Panel Vector Autoregressive (P-VAR) model based on data from 36 OECD countries over the period 2009–2022. The empirical framework accounts for long-run cointegration, Granger causality, and dynamic interdependence through impulse response analysis. The results show that environmental TBTs tend to enhance trade in high-technology and high-income contexts, where strong institutional and certification capacities enable firms to turn regulatory compliance into competitiveness gains. By contrast, the effects are weaker or insignificant in economies with lower technological and institutional capacity, where environmental standards often act as market access barriers. These findings highlight the heterogeneous and conditional nature of environmental TBTs, suggesting that their trade impact depends on a country’s level of technological readiness, income, and regulatory capability. Journal: International Economic Journal Pages: 57-83 Issue: 1 Volume: 40 Year: 2026 Month: 01 X-DOI: 10.1080/10168737.2025.2584139 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2584139 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:40:y:2026:i:1:p:57-83 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2613859_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250815T221317 git hash: a1bee4f0b5 Author-Name: Sarthak S. Behera Author-X-Name-First: Sarthak S. Author-X-Name-Last: Behera Author-Name: Hyeongwoo Kim Author-X-Name-First: Hyeongwoo Author-X-Name-Last: Kim Author-Name: Soohyon Kim Author-X-Name-First: Soohyon Author-X-Name-Last: Kim Title: Asymmetric Roles of Macroeconomic Variables in the Real Exchange Rate: Insights from U.S.-Korea Data Abstract: This paper investigates the asymmetric out-of-sample predictability of macroeconomic variables for the real exchange rate between the United States and Korea. While conventional models often suggest that the bilateral real exchange rate is primarily driven by the relative economic performance of the two countries, our research highlights the superior predictive power of latent factors obtained from U.S. economic variables, while Korean factors fail to enhance predictability and often act as noise. We attribute the strong predictability of U.S. factors to significant cross-correlations observed among a panel of bilateral real exchange rates vis-à-vis the U.S. dollar, indicating a limited role for idiosyncratic factors associated with smaller economies. Our major findings are based on data from the pre-COVID19 era. We further explore how economic crises disrupt this relationship, resulting in temporary yet persistent disconnects between the real exchange rate and macroeconomic fundamentals. Journal: International Economic Journal Pages: 84-113 Issue: 1 Volume: 40 Year: 2026 Month: 01 X-DOI: 10.1080/10168737.2026.2613859 File-URL: http://hdl.handle.net/10.1080/10168737.2026.2613859 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:40:y:2026:i:1:p:84-113 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2616606_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250815T221317 git hash: a1bee4f0b5 Author-Name: Jung Hur Author-X-Name-First: Jung Author-X-Name-Last: Hur Author-Name: Hyeog Ug Kwon Author-X-Name-First: Hyeog Ug Author-X-Name-Last: Kwon Author-Name: Hangeul Song Author-X-Name-First: Hangeul Author-X-Name-Last: Song Title: The Impacts of Bilateral Value Chains Between Japan and Korea on Value-Added Creation of Manufacturing Firms Abstract: This paper investigates bilateral value-chain participation between Japan and Korea and its association with firm-level value-added. Using firm-level data for both Japanese and Korean manufacturing firms over the period 2006–2014, we find that firms in both countries operating in industries with stronger backward bilateral value-chain linkages of Korea with Japan—or equivalently, forward linkages of Japan with Korea—tend to exhibit higher real value-added, while the opposite direction of participation is associated with lower value-added. These patterns are broadly observed across major manufacturing industries, with the automobile industry exhibiting distinct behavior. Journal: International Economic Journal Pages: 180-207 Issue: 1 Volume: 40 Year: 2026 Month: 01 X-DOI: 10.1080/10168737.2026.2616606 File-URL: http://hdl.handle.net/10.1080/10168737.2026.2616606 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:40:y:2026:i:1:p:180-207 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2584133_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250815T221317 git hash: a1bee4f0b5 Author-Name: Hoyong Jung Author-X-Name-First: Hoyong Author-X-Name-Last: Jung Author-Name: Seungwoo Chin Author-X-Name-First: Seungwoo Author-X-Name-Last: Chin Title: Can Jobs Reduce Crime? Evidence from a Minimum Wage Policy in South Korea Abstract: This study examines the effect of employment on crime in South Korea. The sharp 16 percent increase in the minimum wage in 2018 significantly affected low-income workers, particularly the young and elderly. Using the interaction between annual minimum wage changes and age groups vulnerable to such changes within local districts as an instrumental variable for employment, the analysis identifies the impact of employment on crime rates. The results show that improved employment conditions lead to lower crime rates: a 1 percent increase in employment reduces crime occurrences per 1,000 people by 0.77, equivalent to a 2.5 percent decline relative to the mean. The reduction in arrests is smaller, as a 1 percent rise in employment lowers arrests per 1,000 people by 0.46, or 1.8 percent of the mean. This gap suggests that when employment worsens, public anxiety about crime may rise, as arrests do not decline as rapidly as crime incidents. Effects differ by crime type, with employment improvements significantly decreasing felonies, minor violence, and property crimes, while increasing intellectual crimes. Journal: International Economic Journal Pages: 114-134 Issue: 1 Volume: 40 Year: 2026 Month: 01 X-DOI: 10.1080/10168737.2025.2584133 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2584133 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:40:y:2026:i:1:p:114-134 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2613855_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250815T221317 git hash: a1bee4f0b5 Author-Name: Yeremia Natanael Author-X-Name-First: Yeremia Author-X-Name-Last: Natanael Title: Trade Restrictions, Governance, and Income Terms of Trade: Evidence from a Global Panel Data Analysis Abstract: This study investigates the extent to which export and import restrictions and governance quality shape an economy's export purchasing power and import capacity as measured by the income terms of trade (ITT) and identifies the determinants of ITT. Despite the growing importance of ITT as a more comprehensive measure of a country's export purchasing power and import capacity, existing literature has largely overlooked the concept, and the relationship between trade restrictions and ITT remains underexplored. Using the two-step system generalised method of moments (GMM) on panel data consisting of 139 countries from 2008 to 2021, results reveal that import restrictions are significantly associated with ITT deterioration, with import licenses, non-tariff measures, and tariffs having relatively sensitive effects. Similarly, export restrictions, especially export licenses, have adverse effects, although the magnitudes are inelastic. Moreover, improvements in governance quality enhance ITT, with control of corruption and regulatory quality playing a substantial role. The results underscore the need for policy strategies aimed at the gradual reduction of trade restrictions, supported by regulatory harmonisation, trade facilitation, and targeted measures to enhance export capacity. Journal: International Economic Journal Pages: 1-45 Issue: 1 Volume: 40 Year: 2026 Month: 01 X-DOI: 10.1080/10168737.2026.2613855 File-URL: http://hdl.handle.net/10.1080/10168737.2026.2613855 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:40:y:2026:i:1:p:1-45 Template-Type: ReDIF-Article 1.0 # input file: RIEJ_A_2601986_J.xml processed with: repec_from_jats.xsl darts-xml-transformations-20250815T221317 git hash: a1bee4f0b5 Author-Name: Sun Lee Author-X-Name-First: Sun Author-X-Name-Last: Lee Author-Name: Seon Ju Lee Author-X-Name-First: Seon Ju Author-X-Name-Last: Lee Author-Name: Dukpa Kim Author-X-Name-First: Dukpa Author-X-Name-Last: Kim Title: The Impact of Foreign Resident Inflows on Regional Economies in South Korea Abstract: This study examines the impact of foreign resident inflows on regional economic growth in 17 metropolitan cities and provinces in South Korea from 2012 to 2023. Employing a panel fixed effects model with time trends and a panel dynamic ordinary least squares (DOLS) model based on the Cobb–Douglas production, the estimation results present that first, a 1% increase in the share of foreign residents among the economically active population is associated with a 0.11 ∼ 0.19% increase in nominal Gross Regional Domestic Product (GRDP) per capita, equivalent to approximately 2.64 ∼ 4.57 trillion KRW nationwide. By region, Ulsan and South Chungcheong Province have the largest growth effects, highlighting the potential benefits of strategically attracting foreign labor to industrialized regions. Furthermore, disaggregation by residence status shows that inflows of skilled and employment-eligible foreign labor have potential positive effect on regional economic growth, while non-employment visa holders are insignificant or negative. These findings suggest the importance of implementing immigration policies that prioritize high-skilled talent and diversify residence categories to promote regional economic growth. Journal: International Economic Journal Pages: 164-179 Issue: 1 Volume: 40 Year: 2026 Month: 01 X-DOI: 10.1080/10168737.2025.2601986 File-URL: http://hdl.handle.net/10.1080/10168737.2025.2601986 File-Format: text/html File-Restriction: Access to full text is restricted to subscribers. Handle: RePEc:taf:intecj:v:40:y:2026:i:1:p:164-179