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on Central and Western Asia |
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Issue of 2010‒11‒20
eighteen papers chosen by Bibhu Prasad Nayak Institute for Social and Economic Change |
| By: | Adrian Pagan (QUT/UTS) |
| Abstract: | In response to the widespread criticism that macro-economists failed to predict the global recession coming from the GFC, we look at whether recessions in Turkey can be predicted. Because the growth in Turkish GDP is quite persistent one might expect this is possible. But it is the sign of GDP growth that needs to be forecast if we are to predict a recession, and this is made more difficult by the persistence in GDP growth. We build a small SVAR model of the Turkish economy that is motivated by New Keynesian models of the open economy, and find that using the variables entering it increases predictive success, although it is still the case that the predictive record is not good. Non-linear models for Turkish growth are then found to add little to predictive ability. Fundamentally, recession prediction requires one to forecast future shocks to the economy, and thus one needs some indicators of these. The paper explores a range of indicators for the Turkish economy, but none are particularly advantageous. Developing a bigger range of these indicators should be a priority for future Turkish macro-economic research. |
| Keywords: | Business cycles, binary models, predicting recessions |
| Date: | 2010–10–10 |
| URL: | http://d.repec.org/n?u=RePEc:qut:auncer:2010_10&r=cwa |
| By: | Cizakca, Murat |
| Abstract: | The claims that the Islamic gold dinar will avoid inflation and other ills of current economic crises are examined by studying how coinage systems actually functioned in history.The article shows that not only these claims are baseless but also that coinage would increase the prevailing interest rate in an economy - hardly an Islamic position. It is argued that a gold or silver based dinar would be harmful for Islamic societies and attempts to introduce them should therefore be prohibited. |
| Keywords: | Islamic gold dinar; interest rate; Gresham's Law; barter; commodity money; money as a medium of exchange; fiat money |
| JEL: | Z12 O53 |
| Date: | 2010–11–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:26645&r=cwa |
| By: | Canan Yildirim (Department of International Finance, Kadir Has University) |
| Abstract: | This paper analyzes the determinants of cross-border acquisitions and the impact of foreign acquisitions on performance in the Turkish banking sector. The results suggest that foreign banks target relatively better performing banks to acquire, and that post-acquisition performance of the targets does not improve. There is some evidence that both established and newly acquired foreign banks focus on expanding their market shares. Concerning static-ownership effects, the results also show that, in general, foreign-owned and state-owned banks perform as well as private-owned domestic banks. The only exception is with respect to non-performing loans, in that state-owned banks seem to suffer from asset quality problems. |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:568&r=cwa |
| By: | Giorgio Gomel (Banca d'Italia); Angelo Cicogna (Banca d'Italia); Domenico De Falco (Banca d'Italia); Marco Valerio Della Penna (Banca d'Italia); Lorenzo Di Bona De Sarzana (Banca d'Italia); Angela Di Maria (Banca d'Italia); Patrizia Di Natale (Banca d'Italia); Alessandra Freni (Banca d'Italia); Sergio Masciantonio (Banca d'Italia); Giacomo Oddo (Banca d'Italia); Emilio Vadalà (Banca d'Italia) |
| Abstract: | The paper analyses Islamic finance from the central bank and supervisory authorityÂ’s perspective, focusing on the European and Italian context. It depicts a rapidly expanding sector, with recent annual growth rates of between 10 and 15 percent and a geographical presence that now reaches several Western countries. Future prospects, however, could be hampered by problems concerning the standardization of products, governance structure, supervisory regulation, monetary policy instruments, and liquidity management. Islamic intermediaries are not necessarily riskier than traditional counterparts but their operational structure tends to be more complex. Key issues in supervision include the treatment of investment accounts and transparency. It has been seen that there are limits to the efficiency of the monetary policy instruments developed so far to remedy the prohibition of interest; moreover, the growth of interbank and money markets is hindered by a shortage of "Shari'ah-compliant" products. Problems arising from the participation of Islamic banks in payment systems are also discussed. |
| Keywords: | Islamic finance, Islamic financial institutions, supervision, monetary policy instrments, payment systems |
| JEL: | G20 F39 Z12 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_73_10&r=cwa |
| By: | Ingrid Kylstad |
| Abstract: | This paper conducts an ontological inquiry into the identity of the European Union, and seeks to establish whether its core identity is of a cultural or political nature through looking at the debate generated by Turkey’s application for EU membership. The concepts of ‘the other’, the nation-state and a secularism rooted in Christianity contributes towards a peculiar culturalist understanding of the EU project both on the left and on the right side of the political spectrum. The debate also demonstrates that there is a gap between what the EU ought to be judging from its fundamental documents, and what kind form of the EU ‘Europe’ is ready for. The liberal idea of the EU being a purely political union based on Kantian ideals will require a whole new language for talking about Europe. |
| Keywords: | EU, Turkey, European identity, Kant, enlargement, the other |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:eiq:eileqs:27&r=cwa |
| By: | Saltoglu, Burak; Yenilmez, Taylan |
| Abstract: | A financial network model, where the coded identity of the counterparties of every trade is known, is applied to both stable and crisis periods in a large and liquid overnight repo market in an emerging market economy. We have analyzed the financial crisis by using various network investigation tools such as links, interconnectivity, and reciprocity. In addition, we proposed a centrality measure to monitor and detect the ‘systemically important financial institution’ in the financial system. We have shown that our measure gives strong signals much before the crisis. |
| Keywords: | systemic risk; financial regulation; financial crisis; BASEL III; systemically important financial institution; Turkey; IMF |
| JEL: | D53 C45 F47 D85 C01 |
| Date: | 2010–11–14 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:26684&r=cwa |
| By: | Sarra Ben Slimane (University of Sousse); Moez Ben Tahar |
| Abstract: | TThe optimal fiscal policy is countercyclical, aiming to keep the output close to its potential. Nevertheless, it has been pointed out that developing countries are unable to run countercyclical fiscal policies. Several researchers have attributed these sub optimal fiscal policies to two groups of arguments. (i) The limited access to domestic or external funds may hinder the ability of government to pursue expansionary fiscal policy in bad time. (ii) The second group of factors explains that sub-optimal fiscal policies are associated with institutional theories. The standard argument suggests that countries pursuing poor fiscal policies also have weak institutions, widespread corruption, a lack of property rights and repudiation of contract. The main goal of this paper is to analyze empirically if the ability of MENA countries to conduct countercyclical fiscal policy is affected by the quality of their institutions, the nature of political regime and/or by the availability of financial resources either on the local or international capital markets. From our fiscal policy regression, we find that budget balance in MENA region is countercyclical. At the same time, total expenditure and total revenue are procyclical. We conclude that MENA countries are unable to run countercyclical fiscal policies if they have weak institutions, limited international access, a domestic credit market and democratic political regimes. |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:566&r=cwa |
| By: | Guglielmo Caporale; Davide Ciferri; Alessandro Girardi |
| Abstract: | We investigate the role of crude oil spot and futures prices in the process of price discovery by using a cost-of-carry model with an endogenous convenience yield and daily data over the period from January 1990 to December 2008. We provide evidence that futures markets play a more important role than spot markets in the case of contracts with shorter maturities, but the relative contribution of the two types of market turns out to be highly unstable, especially for the most deferred contracts. The implications of these results for hedging and forecasting crude oil spot prices are also discussed. |
| Keywords: | Cointegration, Oil market, Futures prices, Price Discovery. |
| JEL: | C32 C51 G13 G14 |
| Date: | 2010–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:pia:wpaper:75/2010&r=cwa |
| By: | Sami Bibi (Department of Economics, University of Laval, Quebec, Canada); AbdelRahmen El-Lahga |
| Abstract: | The purpose of this paper is to apply a general and unified approach to inequality measurement in Arab countries. To this end, a wide class of inequality indices, proposed by Olmedo et al. (2009) and based on the Bonferroni (1930) curve, rather than the Lorenz curve, is used. When local measures of inequality are aggregated using an appropriate weighting system, familiar indices such as the Gini index can be retrieved. The choice of the weighting system yields a variety of inequality measures that depend on which part of the income distribution the overall inequality index is focused. Our framework offers a reassessment of inequality trends in the Arab world. Our results show that whatever the trend of inequality experienced by the selected Arab countries, the poorest people do not seem to be much affected by the changes in the inequality patterns. For instance, when some countries undergo a rise in overall inequality, changes in the inequality experienced by the poorest population are less pronounced. Inversely, when inequality decreases, the richest percentiles seem to become locally more equal than poorer ones. These findings imply that change in the average income of the poorest is generally very low. |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:erg:wpaper:567&r=cwa |
| By: | Sofronis Clerides; Peter Davis; Antonis Michis |
| Abstract: | Did the rise in anti-American sentiment caused by the Iraq war affect sales of US goods abroad? We address this question using data on sales of soft drinks and fabric detergents in nine Arab countries. We find a statistically significant but modest and short-lived negative impact of the war on sales of US soft drinks in some countries but no impact on the sales of detergents in any country. Variation in aggregate market shares of US products across countries correlates with consumer attitudes toward the US in the soft drink market but not in the detergent market. |
| Keywords: | consumer behavior, consumer boycotts, Iraq war. |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:ucy:cypeua:6-2010&r=cwa |
| By: | Aleksandar Zaklan; Georg Zachmann; Anne Neumann |
| Abstract: | We analyze the dynamic effect of prices and price volatility on current oil production, both on the level of country groups and the major individual producer countries. A comprehensive dataset at monthly frequency allows us to include a rich lag structure while controlling for key global and local determinants as well as seasonality. Our set of explanatory variables also includes real economic activity, investment, the strength of the U.S. dollar and institutional quality. We provide a naïve regression analysis using a broad model to show that lagged explanatory variables are important determinants of current oil production. We find that the reaction of oil production is heterogeneous across both country groups and the major individual producer countries. |
| Keywords: | Crude oil, prices and production, dynamic time series |
| JEL: | D43 L13 Q43 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1075&r=cwa |
| By: | Sinha, Pankaj; Gupta, Sushant; Randev, Nakul |
| Abstract: | This paper examines the state of the Indian economy pre, during and post recession by analyzing various macro economic factors such as GDP, exchange rate, inflation, capital markets and fiscal deficit. We forecast some of the major economic variables using ARIMA modeling and present a picture of the Indian economy in the coming years. The findings indicate that Indian economy is reviving after a slowdown during the period of global recession. It is forecasted that GDP, foreign investments, fiscal deficit and capital markets will rise in 2010-11. Furthermore, the rupee-dollar exchange rate will not change much during the same period. |
| Keywords: | ARIMA; Box-Jenkins; Indian Economy; Forecasting |
| JEL: | B22 E00 C22 E37 C01 |
| Date: | 2010–10–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:26539&r=cwa |
| By: | Mark J. Holmes (Department of Economics, Waikato University Management School); Theodore Panagiotidis (Department of Economics, University of Macedonia); Jesus Otero (Facultad de Economia, Universidad del Rosario) |
| Abstract: | The validity of the expectations hypothesis of the term structure is examined for a sample of Asian countries. A panel stationarity testing procedure is employed that addresses both structural breaks and cross-sectional dependence. Asian term structures are found to be stationary and supportive of the expectations hypothesis. Further analysis suggests that international financial integration is associated with interdependencies between domestic and foreign term structures insofar as cross-term structures based on differentials between domestic (foreign) short- and foreign (domestic) long-rates are also stationary. |
| Keywords: | Heterogeneous dynamic panels, term structure, mean reversion, panel stationarity test |
| JEL: | C33 F31 F33 G15 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:mcd:mcddps:2010_18&r=cwa |
| By: | Solanko, Laura (Bank of Finland Research) |
| Abstract: | This study comprises an introductory section and three essays analysing Russia’s economic transition from the early 1990s up to the present. The papers present a combination of both theoretical and empirical analysis on some of the key issues Russia has faced during its somewhat troublesome transformation from state-controlled command economy to market-based economy. The first essay analyses fiscal competition for mobile capital between identical regions in a transition country. A standard tax competition framework is extended to account for two features of a transition economy: the presence of two sectors, old and new, which differ in productivity; and a non-benevolent regional decision-maker. It is shown that in very early phase of transition, when the old sector clearly dominates, consumers in a transition economy may be better off in a competitive equilibrium. Decision-makers, on the other hand, will prefer to coordinate their fiscal policies. The second essay uses annual data for 1992–2003 to examine income dispersion and convergence across 76 Russian regions. Wide disparities in income levels have indeed emerged during the transition period. Dispersion has increased most among the initially better-off regions, whereas for the initially poorer regions no clear trend of divergence or convergence could be established. Further, some – albeit not highly robust – evidence was found of both unconditional and conditional convergence, especially among the initially richer regions. Finally, it is observed that there is much less evidence of convergence after the economic crisis of 1998. The third essay analyses industrial firms’ engagement in provision of infrastructure services, such as heating, electricity and road maintenance. Using a unique dataset of 404 large and medium-sized industrial enterprises in 40 regions of Russia, the essay examines public infrastructure provision by Russian industrial enterprises. It is found that to a large degree engagement in infrastructure provision, as proxied by district heating production, is a Soviet legacy. Secondly, firms providing district heating to users outside their plant area are more likely to have close and multidimensional relations with the local public sector. |
| Keywords: | Russia; transition; regional issues; tax competition; infrastructure |
| JEL: | H20 H50 N90 P20 |
| Date: | 2010–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofism:2006_036&r=cwa |
| By: | Sreenivasan Subramanian (Madras Institute of Development Studies) |
| Abstract: | Conventional approaches to the measurement of income-poverty require the ability to identify the poor by reference to a specified poverty line. On the face of it, it may appear to be unproblematic to specify such a poverty line. There are, however, analytical and conceptual difficulties entailed in the identification exercise of poverty measurement, and many of these difficulties have to do with the determination of the appropriate space in which to seek invariance of the poverty standard in terms of which poverty comparisons can be effected. These conceptual niggles have been a feature of the actual experience of the evolution of money-metric poverty lines in concrete historical settings. This essay reviews and critically interprets the Indian experience of poverty estimation with specific reference to the identification problem as it has been addressed in the country in the last fifty or so years. The essay also briefly engages with aspects of the record, in this regard, of the United States Federal Government’s poverty thresholds and the World Bank’s international poverty lines. An attempt is made to locate the analytical basis of the conceptual difficulties informing the identification exercise, and to relate this to the confusions and controversies that have attended many of the actual efforts in India and elsewhere to assess the magnitudes, spatial distribution, and temporal trends of money-metric poverty. Finally, the essay also advances an alternative practical proposal for the measurement of poverty which avoids the identification exercise altogether, and incorporates within itself aspects of the notions of both relative inequality and inclusive growth. This approach is certainly not exempt from conceptual difficulties of its own. It is, nevertheless, worth asking if the directness and simplicity of this alternative prescription, combined with the conceptual and practical difficulties which also inform the conventional approach to the identification problem, may constitute grounds for submitting the proposal to at least a preliminary consideration. It remains to add that this essay draws very heavily on earlier work done by the author on its subject of enquiry. |
| Keywords: | money-metric poverty line; resources; capabilities; evolution of Indian poverty line; US poverty thresholds; the World Bank poverty line; alternative approach to measuring poverty; quintile income |
| JEL: | D30 I30 I32 O15 |
| Date: | 2010–11–11 |
| URL: | http://d.repec.org/n?u=RePEc:got:gotcrc:046&r=cwa |
| By: | D. Narayana |
| Abstract: | Early writers on fertility decline (Thompson 1929; Davis 1945 1955 1963; Notestein 1945; Feemdman 1961 -62) emphasized broad forces of modernization, such as urbanization, industrialization, shifts to non-agricultural labor, and increased literacy, as bringing about changes in traditional structures. The neoclassical theoreticians shifted the focus to the micro-level and translated the changes in macro conditions into individual and household calculations. Both these strands of theoretical work have come under attack in recent years. [Working Paper No. 268] |
| Keywords: | fertility, modernisation, urbanisation, industrialization, traditional |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:3165&r=cwa |
| By: | Oshio, Takashi; Nozaki, Kayo; Kobayashi, Miki |
| Abstract: | This study attempts to examine relative income effects on perceived happiness in three major Asian countries -- China, Japan, and Korea -- in comparison with the United Sates, on the basis of largely comparable nationwide surveys in these countries. Consistent with the results from previous studies in Western countries, comparisons with an individual's own income and average income of the reference group are significantly associated with the individual's perceived happiness in Asia. The associations between relative income and happiness are stronger for individual income than family income in China, while the opposite is true in Japan and Korea. Even after controlling for the subjective assessment of family income or personal class identification within the society as a whole, income comparisons within the reference group matter for assessing happiness, especially when using family income for comparisons. Moreover, relative deprivation within the reference group, which is measured by the Yitzhaki index, is negatively related to happiness, providing more evidence for the validity of the relative income hypothesis. |
| Keywords: | Relative income, Relative deprivation, Asia |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:hit:piecis:487&r=cwa |
| By: | Olga Demidova; Marcello Signorelli |
| Abstract: | The main purpose of this paper is to estimate the influence of the 1998 and 2008 crises on the youth unemployment rates (age class 20-29) in Russian regions. The investigation is founded on the panel data for 78 Russian regions during 1997–2008 provided by ROSSTAT (the main Russian State statistical organization). We compare the level and dynamics of the youth unemployment in various Russian regions and try to solve three main questions. Are there any special features of the youth unemployment in comparison with overall unemployment? How the 1998 crisis did change - and how the 2008 crisis is going to change - the youth unemployment dynamics? What can we learn from the impact of 1998 crisis and what is the main difference with the impact of the 2008 crisis? With the help of the obtained results we define some preliminary policy suggestion. |
| Keywords: | financial crises, regional youth unemployment, Russian labour market. |
| JEL: | R23 E24 |
| Date: | 2010–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:pia:wpaper:78/2010&r=cwa |