International Journal of Economic Sciences and Applied Research

ISSN: 1791-5120   E-ISSN: 1791-3373

 

Publisher: Kavala Institute of Technology

Host/Platform: Kavala Institute of Technology

Country: Greece

Language(s): English

Journal Homepage: http://www.ijesar.org
Year Open Access Began: 2008
Keywords: economics, business informatics, accounting
Subjects: Economic theory. Demography , Social Sciences

Volumes

Volume 7

Issue 2 (Sept 2014)

International financial transmission of the Fed's monetary policy
Nikola Mirkov (Swiss National Bank, Borsenstrasse 15, 8022 Zurich, Switzerland)
fulltext: http://www.ijesar.org/docs/volume7_issue2/international_financial_transmission.pdf
pages: 7 - 49
(abstract)

This paper proposes a way to study the transmission mechanism of the US monetary policy to foreign yield curves. It elaborates the high-frequency identification of monetary policy shocks from (Piazzesi, 2005) in an international setting. The shocks are extracted from a two-country term structure model and the procedure is illustrated on the US-UK daily data.

The impact of the recent global crisis on the prioritization of central banks final objectives. A structural approach in the context of Central and Eastern European states
Iulian Vasile Popescu ("Al. I. Cuza" University of Iasi, Bd. Carol I no. 22, 700505, Iasi, Romania)
fulltext: http://www.ijesar.org/docs/volume7_issue2/banks_final_objectives.pdf
pages: 51 - 76
(abstract)

This paper aims to identify the actual objectives of monetary authorities in Central and Eastern Europe (CEE) that promote an independent monetary policy. In this sense we consider the study of central banks (CBs) behavior in the Czech Republic, Poland, Romania and Hungary in establishing short-term nominal interest rate by estimating a Taylor-type monetary policy rule, with new features in terms of elements aimed at exploring the interactions between the monetary policy and financial stability. We estimate the monetary policy rule based on a dynamic stochastic general equilibrium model (DSGE). The main results revealed the strong stance of the selected monetary authorities towards their fundamental objective of price stability, but in parallel, towards stabilizing the exchange rate and real economic activity and the existence of specific elements indicating a leaning against the wind orientation of the monetary policy in countries under analysis. Following the emergence of international turmoil our analysis has identified the maintaining of a strong orientation towards the primary objective of monetary policy, a similar relative stance of monetary policy relative to the stabilization of the real activity alongside a decrease in the focus of stabilizing the exchange rate, while the accentuated focus on financial stability does not appear to be achieved through monetary policy.

Growth and project finance in the least developed countries
Lisbeth F. la Cour (Department of Economics, Copenhagen Business School, Porcelaenshaven 16A, 2000 Frederiksberg, Denmark), Jennifer Müller (Houverather Heide 3, 41812 Erkelenz, Germany)
fulltext: http://www.ijesar.org/docs/volume7_issue2/growth_project_finance.pdf
pages: 77 - 103
(abstract)

This article examines the effects of project finance on economic growth in the least developed countries (LDC). Inspired by the neoclassical growth model we set up an econometric model to estimate the effects of project finance for a sample consisting of 38 of the least developed countries using data from the period 1994-2007. The results of our study suggest, that project finance has a significant positive effect on economic growth and therefore constitute an important source of financing in the selected set of countries. Additionally, the project sheds light on other factors of importance for economic growth in LDCs. We find that a higher regulatory quality, lower government consumption and a higher level of education helps increase growth. The significance of these variables are, however, not as consistently robust as the results for project finance.

Business concentration through the eyes of the HHI
George Djolov (University of Stellenbosch, and Socio-Economic Integration Unit, Statistics South Africa, Pretoria, South Africa)
fulltext: http://www.ijesar.org/docs/volume7_issue2/business_concentration_hhi.pdf
pages: 105 - 127
(abstract)

This paper examines the understanding of business concentration through the Her findahl-Hirschman Index (HHI), by showing that this index is conceptually a model according to which this concentration is the consequence of a renewal process. This process is prompted by firms engaging in different types of economic activity as the means by which to vie for market share. The resultant rivalry produces departures between the market shares of firms. These departures ultimately transmit into differing concentration levels attributable only to the economic activity with which firms vie. As a consequence, while the HHI is commonly interpreted to be a screening indicator of market structure, it is in fact first and foremost a screening indicator of market conduct, which incidentally doubles-up as an indicator of market structure. As part of this, the paper shows that while the HHI cannot identify the exact economic conduct that produces the corresponding business concentration of the observed market structure, it does reveal that whatever this conduct is, it is always subordinated to some type of regenerative or revitalising process.

Directional accuracy for inflation and unemployment rate predictions in Romania
Mihaela Simionescu (Institute for Economic Forecasting of the Romanian Academy, 050711, Bucharest - Romania, Casa Academiei, Calea 13 Septembrie no.13, District 5)
fulltext: http://www.ijesar.org/docs/volume7_issue2/directional_accuracy_romania.pdf
pages: 129 - 138
(abstract)

The main objective of this study is to assess the usefulness and rationality of the inflation and unemployment rate forecasts made for Romanian by three experts in forecasting: F1, F2 and F3. All the unemployment rate forecasts over the horizon 2001-2013 provided by all experts do not provide valuable information for future decisional process. According to Pesaran-Timmermann test, the directional forecasts of F3 and the autumn expectations of F2 are useful and rational.

Role of fiscal policy for private investment in Pakistan
Ghulam Rasool Madni (Department of Economics at "The University of Lahore" Lahore, Pakistan)
fulltext: http://www.ijesar.org/docs/volume7_issue2/fiscal_policy_pakistan.pdf
pages: 139 - 152
(abstract)

Fiscal policy has much controversial debate regarding its effectiveness on private investment. Taxation and government expenditure are two main instruments of fiscal policy. This paper is aimed to analyze the effect of fiscal deficit and other variables on private investment of Pakistan. The data time span for this study is 1979-2012. After finding the integration order of all variables by Augmented Dicky Fuller Test, the impact of variables is analyzed by utilizing the Auto Regressive Distributed Lag approach of Cointegration which is a better estimation technique for small sample size. Error Correction Model is applied for short run dynamics. The results reveal that fiscal deficit, rate of interest, inflation and external debt are affecting negatively the private investment in Pakistan while exchange rate and exports have a positive impact on private investment.

The effects of the implementation of value-based management
Valentin Beck (Leeds Metropolitan University, UK)
fulltext: http://www.ijesar.org/docs/volume7_issue2/value_based_management.pdf
pages: 153 - 165
(abstract)

Many managers are caught in a dilemma: between a desire to maximize the value of their companies and the demands of "stakeholder theory" to take into account the interests of all the stakeholders in a firm. The way out of the conflict lies in a new way of measuring value. The purpose of this paper is to explore how value-based management is perceived, implemented, and utilized in leading automotive corporations in Germany, and to examine factors that influence the decision to utilize it. The data was gained by using in-depth interviews with financial managers of German automotive corporation to study their opinions of and experiences with value-based management systems and metrics. The findings of the empirical study and primary research shows the problems of value-based management implementation in failing to achieve the right balance between all actors of agency conflict.

Issue 1 (Apr 2014)

Growth and inequality examined by integrating the Walrasian general equilibrium and neoclassical growth theories
Wei-Bin Zhang (Ritsumeikan Asia Paci fi c University, Jumonjibaru, Beppu-Shi, Oita-ken, 874-8577 Japan)
fulltext: http://www.ijesar.org/docs/volume7_issue1/walrasian_general_equilibrium.pdf
pages: 7 - 32
(abstract)

This paper builds a heterogeneous-households growth model of a small open economy with fixed resource (land) by integrating the Walrasian general equilibrium and neoclassical growth theories. The production side consists of two sectors. We use an alternative utility function proposed by Zhang, which enable us to develop a dynamic growth model with genuine heterogeneity. The wealth and income inequality is due to household heterogeneity in preferences and human capital as well as the households’ initial wealth. This is different from the standard Ramsey-type heterogeneous-households growth models, for instance, by Turnovsky and Garcia-Penalosa (2008), where agents are heterogeneous only in their initial capital endowment, not in preference or/and human capital. We simulate the model for an economy with three types of households. The system has a unique stable equilibrium point. We also simulate the motion of the national economy and carry out comparative dynamic analysis with regard to changes in the rate of interest, the population, the propensity to stay at home, and the propensity to save. The comparative dynamic analysis provides some important insights.

Business cycle correlation between the Euro area and the Balkan countries
Sofia Gouveia (Centre for Transdisciplinary Development Studies, Department of Economics, Sociology and Management, University of Trás-os-Montes and Alto Douro, Complexo Pedagógico, Quinta de Prados, 5001-801 Vila Real, Portugal)
fulltext: http://www.ijesar.org/docs/volume7_issue1/business_cycle_correlation.pdf
pages: 33 - 49
(abstract)

This paper examines the degree of trade integration and business cycle synchronisation between eight Balkan countries and the Euro area over the period 2000:1-2011:4. The main findings are that Slovenia and the Former Yugoslav Republic of Macedonia exhibit a high level of openness relative to Euro area and seem to have achieved a large degree of business cycle synchronisation with the aggregate Euro area cycle. The other Balkan countries are characterized by high trade integration with the EMU (except Greece and Turkey) and a rather modest degree of association with the Euro area cycle, although Turkey is nearest the average of the EMU countries. We further document that there is a tendency for an increase in the degree of synchronisation with EMU for all Balkan countries. We also note, however, that at the end of the period, the degree of synchronisation has become less pronounced.

BRICs in the global economy under the prism of economic nationalism of IPE
Spyros A. Roukanas (Lecturer, Dept. of International and European Studies, University of Piraeus, Piraeus, Greece), Gabriel V. Diamantis (Associate professor, Dept. of International and European Studies, University of Piraeus, Piraeus, Greece)
fulltext: http://www.ijesar.org/docs/volume7_issue1/brics_ipe.pdf
pages: 51 - 67
(abstract)

The international economic crisis which began in 2007 has limited developed countries’ growth rates and manifested debt crises in certain economies in the Eurozone. It is the aim of this article to analyze the role that the BRIC group of nations has played in international financial institutions under the prism of economic nationalism of International Political Economy. Firstly, it aims to deepen our understanding of the emergence of the BRICs in the world economy. To this end, a macroeconomic analysis is carried out with the aim of making clear the changes the BRICs have brought to the world economy. Secondly, an analysis is made of the extent to which the global economic crisis has enhanced the role of the BRICs in the world economy, for instance in the decisions taken by powerful institutions such as World Trade Organization, the International Monetary Fund and its sister organization the World Bank. An analysis of the findings of the study is also provided.

Is there a relationship between fiscal sustainability and currency crises? International evidence based on causality tests
Alexis Cruz-Rodriguez (Pontificia Universidad Católica Madre y Maestra, Av. Abraham Lincoln Esq. Rómulo Betancourt, Ensanche La Julia, Santo Domingo, Dominican Republic)
fulltext: http://www.ijesar.org/docs/volume7_issue1/fiscal_sustainability_currency_crises.pdf
pages: 69 - 87
(abstract)

This paper uses Granger causality tests on a fiscal sustainability indicator (FSI) and currency crises for 17 countries to evaluate the direction of causality between the FSI and currency crises. The FSI developed by Croce and Juan-Ramón (2003) is used. Also, different definitions for currency crises are used to evaluate whether they induce different results in the analysis. In general, the results suggest evidence of causality between the lagged FSI and currency crises.

A partial equilibrium analysis of NAFTA's impact on U.S. bilateral trade
Cephas Naanwaab (Assistant Professor of Economics, School of Business and Economics, North Carolina A&T State University, 1601 East Market Street, Greensboro, NC 27411, USA), Osei-Agyeman Yeboah (Associate Professor and Interim Director, L.C. Cooper Jr. International Trade Center, North Carolina A&T State University, 1601 East Market Street, Greensboro, NC 27411, USA)
fulltext: http://www.ijesar.org/docs/volume7_issue1/nafta.pdf
pages: 89 - 112
(abstract)

This paper examines the effects of the North American Free Trade Agreement on agricultural commodity trade using extensive data. The data cover agricultural exports and imports between the U.S. and NAFTA partners over the extended period of 1989-2010. The commodities covered in the analyses include; corn, soy bean, cotton, wheat, fresh vegetables, poultry, dairy products, and red meats. A partial equilibrium model, in which we derive each trading partner’s excess demand and excess supply, is used to study the impact of NAFTA on trade, controlling for other trade-inducing variables such as exchange rates, tariffs, per capita incomes, and relative prices. Regression results show mixed effects of NAFTA on different commodities while graphical and counterfactual analyses indicate strictly positive effects.

Modelling nonlinear behavior of labor force participation rate by STAR: An application for Turkey
Sibel Cengiz (Associate Professor of Economics, Department of Economics, Mugla Sitki Kocman University, Mugla, Turkey), Afsin Sahin (Associate Professor of Economics, Department of Banking, Gazi University, Ankara, Turkey)
fulltext: http://www.ijesar.org/docs/volume7_issue1/labor_force_participation_rate.pdf
pages: 113 - 127
(abstract)

The aim of this paper is to contribute to the understanding of the behavior of participation rates in terms of gender differences. We employed smooth autoregressive transition models for the quarterly Turkish labor force participation rates (LFPR) data between 2000: Q1 - 2011: Q4 to present an asymmetric participation behavior. The smoothness parameter indicates a gradual transition from low to high regimes. It is higher for female workers compared to the male workers. Participation rates diminish during a recession but they increase smoothly during the periods of expansion. The estimation results of Enders et al. (1998) also verified the asymmetry and nonlinearity in participation rates. During periods of economic expansion, they are higher than the threshold but the low regime indicator function takes the value zero. The results of the paper have economic implications for policy makers. Due to the discouraged worker and added worker effects, LFPR should be observed with the unemployment rates while evaluating the tightness of the labor market.

How accounting information and macroeconomic environment determine credit risk? Evidence from Greece
Vasiliki Makri (PhD Candidate, Department of Business Administration, University of Patras, Greece), Konstantinos Papadatos (Research Associate, Department of Business Administration, University of Patras, Greece)
fulltext: http://www.ijesar.org/docs/volume7_issue1/credit_risk.pdf
pages: 129 - 143
(abstract)

In this paper, we study the determinants of credit risk in the Greek banking sector. Credit risk is related to bank asset quality and considered responsible for bank failures. In this context, we investigate how loan quality can be explained by accounting and macroeconomic factors. Aggregate loans loss provisions (LLP) are used as a proxy for measuring credit risk. Using quarterly aggregate data that span from 2001Q1 to 2012Q4, we examine a period that covers the recent financial crisis in Greece. The results of Generalized Method of Moments (GMM) estimations indicate that LLP is positively affected by unemployment, public debt, loans loss provisions of previous quarter and negatively by capital adequacy ratio. Therefore, our findings support the hypotheses that both macroeconomic environment and accounting information exert significant influence on the credit risk of Greek banking system.