Aviral Kumar Tiwari, Muhammad Shahbaz, Muhammad Shahbaz Shabbir (2012) Is Per Capita GDP Non-linear Stationary in SAARC Countries? European Economics Letters 1(1), 1-5.
Abstract: Using data for SAARC region, we found real GDP per capita is nonlinear stationary implying that shocks to economy by economic policies (external or internal) have permanent effect on real per capita GDP of SAARC countries. This finding reveals that classical growth model works better to boost economic growth in long run. Download at: http://eelet.org.uk/EEL1(1)1-5.pdf
Francesco Rossi (2012) U.K. cross-sectional equity data: do not trust the dataset! The case for robust investability filters. European Economics Letters 1(1), 6-13.
Abstract: We propose a novel approach to cross-sectional equities sample selection, derived from best market practice in index construction and focused on investability. Using the U.K. market as a template, we first demonstrate how the popular Datastream dataset is plagued by data deficiencies that would surely invalidate statistical inferences, and that are not addressed by commonly used filters. We show the benefits and need for a supplementary data source. We then develop robust investability filters to ensure statistical results from cross-sectional analysis are economically meaningful, an issue overlooked by most studies on cross-sectional risk pricing. Download at: http://eelet.org.uk/EEL1(1)6-13.pdf
John C. Anyanwu (2012) Accounting for female employment in Africa. European Economics Letters 1(1), 14-26.
Abstract: Women employment has become a critical development challenge globally. This is because the exclusion of women in employment has potential negative effects on both sustainable inclusive development and poverty reduction. In this paper, we examine the characteristics and the key determinants of female employment in Africa. Our empirical estimates, using available cross-sectional data over the period, 1991 and 2009 suggest that in the all-Africa estimation, quadratic levels of real per capita GDP, greater access to credit by the private sector, more education, government consumption expenditure, economic growth increase female employment while higher levels of real GDP per capita, levels and quadratic institutionalized democracy, higher female to male population ratio, and being a net oil-exporting country tend to lower it. In Sub-Saharan Africa, quadratic levels of real per capita GDP, higher domestic investment, more education, and being a net oil-importing country tend to increase female employment while the level of real GDP per capita, the level of institutionalized democracy and its quadratic term, trade openness, urban share of the population, female to male population ratio, and credit to the private sector tend to lower it. For North Africa, the quadratic element of real GDP per capita, greater access to credit by the private sector, inflation, urbanization, and greater openness of the economy increase female employment; the level of real GDP per capita, the level of institutionalized democracy, and domestic investment lower female employment in the sub-region. The policy implications of these results are discussed. Download at: http://eelet.org.uk/EEL1(1)14-26.pdf
B.V.L. Narayana (2012) Understanding impact of education on health: a processual solution to an enigma-insights from India. European Economics Letters 1(1), 27-45.
Abstract: A population’s education levels determine its health status and in turn its economic growth. Despite considerable research, the mechanisms through which education influences health seeking behaviour and the way it is operationalised is still a subject of intense debate. Consequently, considerable resources are continuing to be spent on education and health literacy without achieving the desired impact. Yet, the need to understand these mechanisms is undeniable in light of its likely significant impact on how we design our health campaigns. This study shows that populations with poor formal literacy rates show equivalent or even better health indices. These target populations have better attitudes, better access and consequently better utilisation of health interventions. This utilisation was dependent upon, first people becoming aware of existence of health conditions and understanding their impact. On being confronted with a specific health condition, this general awareness would prime specific health seeking behaviours. The success of such behaviours was crucially dependent upon access to corresponding health interventions. Thus a sequential model of general awareness-specific awareness-attitudes-access-utilisation is developed. Our understanding of these mechanisms is facilitated if Health awareness is measured not only in terms of general indicators such as formal schooling or education but also in terms of specific awareness indicators. This has immense policy implications in health care, both in terms of content of message and emphasis on education and specific health behaviour campaigns. It also crucially changes the mechanism of evaluation of health behaviour interventions. Download at: http://eelet.org.uk/EEL1(1)27-45.pdf
Giscard Assoumou-Ella (2012) Responses of African economies to the international economic shocks: an empirical study. European Economics Letters 1(1), 46-51.
Abstract: The objective of this paper is to verify the assumption of decoupling or re-coupling African economic condition and international economic shocks. This assumption is tested in 15 African countries using a SVAR model for the period 1970-2007 and the results suggest that there is re-coupling. In fact, 12 countries are exposed to OEDC GDP per capita shocks, six to Federal funds effective rate shocks and five to World price of oil shocks. Furthermore, we investigate the viability of the creation of an economic and monetary union and a unified currency among African countries by comparing the reaction of African economies to those international shocks. The impulse response functions of these economies after an international income, monetary or price shocks tend to be more or less similar. According to this indicator, we are optimistic for the possibility and the viability of this project. Download at: http://eelet.org.uk/EEL1(1)46-51.pdf
Pamphile MEZUI-MBENG (2013) Business and credit cycles in CAMEU economies, European Economics Letters, Volume 2, Number 1, Page 1-6.
Abstract: We analyze potential interactions between the cyclic fluctuations in credit and activity in five countries of the Central Africa Monetary and Economic Union (CAMEU) economies. Cycles are extracted by using a pass-band filter, and then characterized over the period 1960-2008 according to the Bry and Boshan algorithm. Co-movements and concordance analysis establish that credit is procyclical in the CAMEU economies. Cointegration and causality tests specify interactions between the both cycles within countries. Indeed, in Chad credit cycle causes activity cycle; in Gabon and Congo, a feedback effect is observed; in Cameroon and CAR causality seems less obvious. Finally, our results reveal specificities in banks behavior towards financing of activity in CAMEU area. Download at: http://eelet.org.uk/EEL2(1)1-6.pdf
Abstract: This paper investigates the relationship between intra-industry trade (IIT) and immigration flows using a gravity model for the period 2000-2010 between Portugal and European Union’s Member States (EU-27). The present study uses the methodology of Kandogan (2003) for separating IIT into its components horizontal (HIIT) and vertical intra-industry trade (VIIT).Using a panel data approach, our study find that immigration has a positive influence on Portuguese intra-industry trade. These results indicate that the immigration can reduce transaction costs between home and host country. We also consider in econometric model, the economic dimension which appears to exercise a positive effect on IIT. Our results confirm the hypothesis that there is a negative effect of transportation costs on trade. Download at: http://eelet.org.uk/EEL2(1)7-11.pdf
Abstract: We extend the Okada & Samreth (2012, EL) and Asongu (2012, EB) debate on ‘the effect of foreign aid on corruption’ by: not partially negating the former’s methodological underpinning (as in the latter’s approach) with a unifying empirical framework and; broadening the horizon of inquiry from corruption to eight institutional quality dynamics (rule of law, regulation quality, government effectiveness, democracy, corruption, voice & accountability, control of corruption and political stability). Core to this extension is a hypothetical contingency of the ‘institutional perils of foreign aid’ on existing institutional quality such that, the institutional downside of development assistance maybe questionable when greater domestic institutional development has taken place. Based on the hypothesis of institutional thresholds for foreign aid effectiveness, the perilous character of development assistance to institutional quality is broadly confirmed in 53 African countries for the period 1996-2010. Download at: http://eelet.org.uk/EEL2(1)12-19.pdf
Abstract: Financial liberalization indicators are tested for sigma convergence and divergence. Sigma convergence requires a significant reduction in the dispersion across nations over time whereas sigma divergence entails a significant increase in dispersion. Using the standard deviation and a linear trend, sigma divergence is supported for an index of capital accounts openness, but sigma convergence is supported for an index of domestic financial sector liberalization. Using instead the coefficient of variation, which accounts for the upward trend in each of the measures, strong evidence is found in support of sigma convergence for both measures. This latter result holds for both advanced and developing nations. Download at: http://eelet.org.uk/EEL2(1)20-23.pdf
Abstract: Are formal institutions instrumental in the effect globalization mechanisms have on the human face? If so, through which freedoms channels are poverty and inequality mitigated? With the instrumentality of formal institutions: (1) de jure financial liberalization (KAOPEN) has a positive income-redistribution impact while the de facto measure (FDI) does not; (2) political liberalization has a disequalizing effect and; (3) economic freedom has a positive (negative) effect on inequality (poverty). Hence, economic freedom does not stop the wealthy from growing wealthier, but at the same time provides for conditions that mitigate poverty. The findings broadly show that, despite the substantially documented negative incidences of some channels of globalization on poverty (and inequality), formal institutions have the capacity to device policies that will give capital openness, trade and economic liberalizations a human face. Social implications and policy options are discussed. Download at: http://eelet.org.uk/EEL2(1)24-31.pdf
Abstract: The study examines the relationships between adult mortality, per capita income and foreign aid. We have included 37 low-income (LIC), 39 lower middle-income (LMIC), 20 upper middle income (UMIC) for the period 1990-2008. Results demonstrate that the highest bilateral causal relation between GDP, aid and mortality is for aid and mortality. Although less effective for particular groups of countries (UMIC), foreign aid generally has a negative impact on mortality, as reported by tests taking into account directional causalities (70% of valid coefficients are negative). This result moderates the pessimist view about international development aid, at least in the domain of assistance for health. Download at: http://eelet.org.uk/EEL2(1)32-37.pdf
Ayesha Mushtaq and Khalid Zaman (2013) Impact of macroeconomic factors on tourism receipts: evidence from SAARC region, European Economics Letters, Volume 2, Number 2, Page 38-43.
Abstract: The purpose of this study is to examine the impact of various macroeconomic factors i.e. per capita GDP; Gross capital formation; trade openness and consumer price index on tourism receipts in selected South Asian Association for Regional Cooperation (SAARC) countries (namely, Bangladesh, Bhutan, Nepal, Pakistan and Srilanka) by using pooled least square, fixed effect and random effect model. The analysis was carried out for the period from 1995 to 2011. By and large, the results reveal that per capita GDP and trade openness both have a positive impact on tourism receipts, as if there is one percent increase in per capita GDP and trade openness, tourism receipt increases by 1.437 percent and 1.982 percent respectively, however, gross capital formation has a significant negative impact on tourism receipt in SAARC region. The results of fixed effect model, which absorb the country specific shocks, show that both per capita GDP and trade openness has a positive impact on truism receipt. However, the magnitude of coefficient varies from pooled OLS to fixed effect model. The final model which incorporate both country and time specific shocks reveal that both per capita GDP and trade openness have a significant impact on tourism receipt, however, the magnitude of the variables in random effect model is less than pooled OLS and fixed effect model. The Hausman model results show that fixed effect model is considered as the best model in the selected SAARC region. Download at: http://eelet.org.uk/EEL2(2)38-43.pdf
Abstract: Latent budget analysis is a classification technique that allows clustering identification by using compositional data. This paper presents examples of how this technique deals with the unit-sum constraint by establishing an initial independence model to which subsequent models are compared in terms of their relative fitness degree. In fact, latent budget analysis does not impose linearity, homogeneity, or even specific distributions on data. Examples analyzed in this work help to understand some important relationships between capital stock composition and income or food diet composition in a heterogeneous sample of countries. Download at: http://eelet.org.uk/EEL2(2)44-49.pdf
Abstract: With earthshaking and jaw-breaking levels of corruption in the African continent, the question on the extent to which corruption influences crime still remains unanswered. This paper assesses the effect of corruption (corruption-control) in 38 African countries using updated data. We find that, crime is highly positively (negatively) correlated with corruption (corruption-control). The potential mitigation effect (by corruption-control) is higher than the corresponding positive effect of corruption, implying corruption-control offsets crime emanating beyond the corruption mechanism (inter alia, other poor governance mechanisms). The relationship is statistically strong when controlling for the number of police officers, age dependency, per capital economic prosperity, level of education, government effectiveness and population density. Given that crime is proxied by the level of organized internal conflict, the findings also sustain the substantial role of corruption in the birth and propagation of conflicts within and across Africa. Policy implications are discussed. Download at: http://eelet.org.uk/EEL2(2)50-55.pdf
Abstract: The object of this paper is to complement theoretical ‘mobile penetration’ literature with empirical evidence in a dual manner: on the one hand, assess the income-redistributive effect of mobile phone penetration and; on the other hand, the instrumentality of good governance in this nexus. Main findings suggest an equalizing income-redistributive effect, with a higher magnitude in the presence of government quality instruments. It follows that, good governance is a necessary condition for a higher income-equalizing effect of mobile phone penetration. The empirical evidence which deviates from mainstream country-specific and microeconomic survey-based approaches is on 52 African countries. ‘Mobile phone’-oriented poverty reduction channels are also discussed. Download at: http://eelet.org.uk/EEL2(2)56-61.pdf
Abstract: This paper analyzes the incentive for a cartel agreement between hospitals. For this purpose we extend a quality competition model developed by Montefiori (2005). We investigate that collusion on a low provided quality level will lead to higher profits for both hospitals. Therefore both hospitals benefit from an agreement. Further we can see if one hospital breaks the cartel rules, while the other stick to the agreement, the defrauding hospital can make additional profits. In addition we study the profits under an infinite time horizon. Under a given specific strategy played by the hospitals, we obtain a particular discount factor under which an agreement still holds. Download at: http://eelet.org.uk/EEL2(2)62-65.pdf
Under Principal-Agent-Supervisor paradigm, we examine in this paper how a tax collection agency changes optimal schemes in order to lessen the occurrence of corruption between the tax collector and the taxpayer. Indeed, the Principal, who maximizes the expected net fiscal revenue, reacts by decreasing tax rates when the supervisor is likely to engage in corrupt transaction with taxpayer. Therefore, the optimal policy against collusion and corruption may explain the rational of the greater reliance on indirect taxes than on direct taxes both in developed and developing countries. Dowload at: http://eelet.org.uk/EEL2(2)66-70.pdf
A vast literature exists that measures the amount of real GDP that is lost when trend inflation is lowered by a percentage point, known as the sacrifice ratio. Ball (1994)’s episodic method of selecting disinflation episodes and calculating the sacrifice ratio is the most widely-used method of measuring these output costs of disinflation. However, this method constrains the disinflation episodes to be ones where trend inflation at the start of an episode is low or moderate. All cases of high inflation, and even hyperinflations, are automatically discarded in the literature. This paper seeks to address what happens if we do not discard the disinflation episodes in cases where inflation is “high.” We find that the sacrifice ratio is much lower when considering cases of high inflation. Moreover, we find that the speed of disinflation has no significant eﬀect on high inflation sacrifice ratios, but trade openness does have a highly negative and significant impact. Furthermore, the evidence indicates that greater trade openness enhances the credibility bonus that can be achieved with more central bank independence in economies that have high inflation. Download at: http://eelet.org.uk/EEL2(2)71-76.pdf