Panoeconomicus

Enigma konzervativnog liberalizma: Da li smo svi ordoliberali? (The Enigma of Conservative Liberalism: Are We All Ordoliberals?)

Novica Supic — 2024-07-12

The Political Determinants of Inward FDI

Eirini Triarchi — 2024-07-12

The popularity of Foreign Direct Investment (FDI) stimulates research on its determinants. This paper highlights the importance of political determinants in explaining inward FDI variation across countries. Adopting the argument that no single theory exists for FDI, it identifies the political factors based on the results of related empirical studies. The literature review’s primary concern is to provide underpinnings for further research on inward FDI distribution in the contemporary international political scene. It sets up the theoretical links between political regimes, political determinants, and FDI. The paper focuses on the importance of specific political variables established in all political systems to influence foreign investors' decision-making process. The distinguished determinants are property rights protection, the signing of Bilateral Investment Treaties (BITs), human rights, and quality of governance.

JEL: F21, F23, F53, P14, P16.

Effect of the Monetary Policy in the United States on the International Share of the U.S. Dollar: 1914–1945

Li Wang — 2024-07-12

The United States Dollar (USD) replacement of the sterling as the dominant currency is not only the result of the "invisible hand," but also the "visible hand." This study analyzes the effect of the monetary policy in the United States (U.S.) on the international share of the USD from 1914 to 1945 using the Bayesian technique, to estimate the time-varying parameter vector autoregressive (TVP-VAR) model. The study posits two main findings. First, the time-point impulse response shows that the increase in the U.S. interest rate results in an increase in the international share of the USD, implying that this increase has an expansion effect on the USD, and the effect has no time-varying characteristics. Second, the equal time interval impulse response shows that the effect of the monetary policy on the share of the USD is greater in the short term.

JEL: E42, E52

Growth and Welfare Effects of Education: Evidence from Asian Countries

Attahir Babaji Abubakar — 2024-07-12

Considering the potential role of education in enhancing the socioeconomic prosperity of countries, this study examines the effect of education on economic growth and household welfare in Asian countries. Static and dynamic panel data estimation techniques were employed for analysis. The findings of the study reveal a significant positive effect of education on economic growth and household welfare, with the growth effect of male education being marginally higher than female education. Interestingly, the household welfare effect of female education is revealed to be higher than male education. These findings imply that for economic growth and household welfare enhancement in the region, female education is as important as male education. Consequent to these findings, the study emphasises the need for policy measures aimed at enhancing both access and quality of education for people of all genders in the region.

JEL: I25, J24

The Behavior of Stock Market Index During the Coronavirus Pandemic in Turkey

Ahmed Alsayed — 2024-07-12

Recently, the coronavirus (COVID-19) pandemic has affected the economic situation all over the world. The objective of this research is to examine the effect of coronavirus spreading and vaccination rate on the stock market index in Turkey. To do that, we have applied several statistical methods, namely ridge, lasso, principal components, and partial least squares (PLS) regression versus elastic-net regression based on empirical mode decomposition, which can overcome the non-stationary problem and nonlinearity characteristics. The result of using the elastic net regression method based on empirical mode decomposition shows significant effects of coronavirus spreading on the stock market, and it varies based on the intrinsic mode function coefficients and frequencies. The findings of this research could assist practitioners and policymakers to design important strategies in the light of varying stock market dynamics during the coronavirus pandemic.

JEL: C22, E58, G12.

Volatility Spillover Networks of Credit Risk: Evidence from ASW and CDS Spreads in Turkey and Brazil

Samet Gunay — 2024-07-12

This study examines received and transmitted volatility spillovers of Credit Default Swap (CDS) and Asset-Swap Spread (ASW) for Brazil and Turkey. The empirical analysis is implemented using two country-based (stock markets and exchange rates) and two global (volatility index and global economic activity index) variables to account for the impact of integration into global markets. Empirical results suggest that both countries display distinctive features in their spillover networks. While exchange rates and the stock market figure prominently in Brazil as a source of spillovers, for Turkey, the primary element in spillovers appears to be credit risk indicators. Time-varying analysis results show that the European Debt Crisis of 2010–2011 and the global liquidity crunch of 2018–2019 are two critical periods in volatility spillovers that occurred toward credit risk indicators. Brazil displays more sensitivity to the developments of the pandemic than Turkey, likely due to its dependence on global economic activity and energy prices. Finally, for both countries, the leading variable in spillovers to credit risk indicators during financial turbulence episodes appears to be foreign exchange markets. This result highlights both economies' fragility and vulnerability to foreign exchange market-based shocks. Thus, we suggest effective and solid measures in this regard. Otherwise, those shocks could potentially induce a higher cost of financing in both economies due to the negative impacts on CDS and ASW spreads.

JEL: F31 G12.

Skill versus Inequality

Leyla Firuze Arda Özalp — 2024-07-12

This paper explores empirical evidence for a connection between income inequality and skill (advanced-level educated workers share) using panel data methods that take into account cross-section dependency and heterogeneity. To assess the income inequality associated with skill, we run a data set for 24 developed The Organisation for Economic Co-operation and Development (OECD) countries from 1995 to 2018. In order to determine the stationary characteristics of the variables, we employ the Cross-sectionally Augmented Im, Pesaran and Shin (CIPS) test approach. Following this, we employ Westerlund (2007), and Gengenbach, Urbain, and Westerlund (2016) Panel Cointegration tests, and then the Panel Dynamic Ordinary Least Squares (PDOLS) estimator. Our empirical test results conclude that there is a relationship between inequality and skill in the long run and the PDOLS estimator findings show that as the skill level in employment increases, inequality decreases. In addition, according to the findings, this negative relationship is more pronounced in the United States, whereas it is more moderate or not valid in European countries.
The results obtained are primarily consistent with the framework presented by Daron Acemoglu (2002, 2003). And these findings constitute one of the main contributions of the study in terms of supporting Acemoglu's (2003) thesis that the skill premium is more pronounced in the United States.

JEL: C23, D63, I24