Analysis of Purchasing power parity with data for Macedonia

This paper examines PPP parity theory with data for Macedonia. We test the empirical consensus in this literature that real exchange rates tend towards PPP in the very long run, also we use co-integration Engle-Granger method and error correction mechanism. The hypothesis we test that PPP theory holds in long run in the case of Macedonia, and this hypothesis is proven to be true.PPP, Exchange rate, Co-integration, unit root, stationarity

Macroeconomic analysis of trade in some CEE countries

The research in this paper is focus on macroeconomic analysis of trade and other relevant indicator for real economy such as government net debt, exchange rate, interest rate, and especially the correlation between trade and growth. Today is widely accepted that openness of counties have important role for economic performance, therefore the investigation of trade is challenge for economists of small developing countries. The mail goal in this paper is theoretical analysis of some macroeconomic indicator as a factor of growth and empirical investigation of trade in some CEE countries.Macroeconomics, CEE countries, trade, exchange rate, PPP, inflation

Eкономската теорија и новата-Кејнзијанска школа

Во трудов се опишува школата на новите–кејнзијанци(Акерлоф и Стиглиц 2 се во групата „цврсти” Нео-Кејнзијанци, кои не ја прифаќаат новата нео-класична синтеза т.е. DSGE моделите),кои како основен извор на нестабилноста во економиите ги набљудуваат шоковите на страната на побарувачката и понудата, за кои краткиот рок е значаен, цените и наемнините се ригидни, очекувањата на економските агенти се рационални но, исто така, и историските податоци ги земаат како значајни, и кои воведоа микроекономски основи во своите макроекономски модели

The causal relationship between patent growth and growth of GDP with quarterly data in the G7 countries: cointegration, ARDL and error correction models

This empirical study investigates the dynamic link between patent growth and GDP growth in G7 economies. ARDL model showed that there exist positive relationship in long run between quarterly growth of patents and quarterly GDP growth. The error correction term suggests that 20,6 percent of the adjustment back to long run equilibrium of industrial production in G7 countries is corrected by 20,6% a year, following a shock like the one in 1974 , which in our study is controlled by a dummy variable D74. In the short run however at one or two lags there exist negative relationship between quarterly patents growth and quarterly growth of GDP. Johansen’s procedure for cointegration showed that long run multipliers are positive between the patent growth and GDP growth in G7 economies. Granger causality test showed that patent growth Granger cause GDP growth in G7 countries. Unrestricted VAR showed that there exists positive relationship between patent growth and GDP growth at two or three lags.Cointegration, ARDL, Error correction models, Johasens’s procedure, Patent growth, GDP growth

Monopolistic competition: Critical evaluation the theory of monopolistic competition with specific reference to the seminal 1977 paper by Dixit and Stiglitz

This paper revisits the D-S (Dixit-Stiglitz) model. It’s a simple general monopolistic model with n monopolistic goods, and a numeraire good Labour ( w=1); aggregation for all goods in the economy. We have considered in our paper constant elasticity of substitution case(CES).On the supply side, the assumption is that the labour is perfectly mobile factor of production across the sectors, so as a result in our model there is single wage rate which we denote as in the other sectors than monopolistic there is constant returns to scale and we can specify the production function: The Dixit-Stiglitz model of monopolistic competition works only when n is large; from the functions of the productions best when one applies linear production function. Under increasing returns to scale monopolistic competition will lead to a greater degree of product differentiation than it is socially optimal.Monopolistic competition, CES, Dixit-Stiglitz model, product differentiation

New Keynesian macroeconomics:Empiricaly tested in the case of R.Macedonia

In this paper we test New Keynesian propositions about inflation and unemployment trade off with the New Keynesian Phillips curve and the proposition of non-neutrality of money. The main conclusion is that there is limited evidence in line with the New-Keynesian theory. Money and growth are cointegrated series and that money growth influences the economics growth with one quarter lag. Cointegration means also that if the two series are cointegrated they have long run equilibrium. St.Louis model in the paper showed overall that increase in money growth leads to decrease in the economy growth. But the effect in the equation at three quarters lag is positive. The NAIRU rate in the unemployment inflation trade off model is almost similar as high to the actual unemployment. In the New Keynesian Phillips curve not surprisingly, there appears to be no statistically significant relationship between inflation and unemployment – even in the classical Philips curve and in adaptive expectations Philips curve by Modigliani-Papademos (1975). Or the Friedman-Phelps-Lucas expectations augmented one between the difference of actual and expected inflation rate and the gap between actual and the natural rate of unemployment presented in the next equation

The macroeconomic implication of exchange rate regimes

This study investigates the relation between macroeconomic variables such as real GDP growth, inflation, unemployment rate, trade deficit and the exchange regimes. The idea is to explore whether the macroeconomic indicators give better result when are under the influence of fixed or fluctuating exchange rates. In order to obtain relevant results, we took 5 countries with fixed and 5 countries with floating exchange rates. The paper also concerns the Macedonian exchange rate regimes. Here the focus is put on two periods. The first one is from 1993- 1995 when the country had fluctuating exchange rate. The second period is from 1995 till now -2011, when Macedonia has been implementing a regime of fixed "pegged" exchange rate.exchange rate, macroeconomic variables

Auction theory and a note on game mechanisms

This paper will review important topics on the subject of auction theory and mechanism design, these include: efficiency first and foremost, also revenue comparison between different types of auctions and the issue of incentive compatibility, individual rationality with the general idea and proof that bilateral trade is inefficient. Mechanism design theory tells us that if buyers and sellers both have private information full efficiency is impossible, however Vickrey auction (single unit auction) will be efficient i.e. will put the goods in the hands of the buyers that value them most. However, the conclusion from this paper is that because of overvaluation of bidders the main result is inefficient, i.e. bids are too high. When weak and strong bidders are compared the main conclusion is that strong bidders’ expected payoff is higher in second price auction (SPA), while weak bidder prefers first price auction (FPA) bid

Empirical Estimation of Is-Lm Model for the US Economy by Applying Jmulti

The main goal of the paper is to examine how well the dynamics properties of the estimated model of the US economy match to the theoretical prediction to the IS-LM model or with other words to test the theoretical IS-LM model for the US by applying time series estimations (standard VAR and VECM time series models). The interest variables in the models are: real GDP, three month interbank interest rate, and real monetary base. Several pre estimation tests have been made: 1) the Jarque - Bera test of normality shows that the normality of the time series is not problem in these models, but the ARCH LM test of heteroscedasticity indicates that the monetary base and interbank interest rate are heterosedastic; 2) The ADF test for unit root and Johansen test for co integration have been made to identify the optimal number of lags of the variables in the models. The applied post estimation Chow test for VAR model indicated that the model is not stable and therefore we use VECM model. The estimated results based on applying VECM model show that if the system is in disequilibrium alteration in the change of interbank interchange interest rate, log of real GDP, and monetary base will be downward 5.5%, 4.6% and 0.4% respectively. The chow test indicates that the VECM model is stable